RPG Life Sciences bets on API expansion to drive next growth phase, eyes more acquisitions

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Ashok Nair, Managing Director of RPG Life Sciences, is betting heavily on the active pharmaceutical ingredients (API) business to power the company's next leg of growth, as the Mumbai-based drugmaker looks to diversify beyond its traditionally strong domestic formulations franchise through acquisitions, capacity expansion and international market penetration.

The company, part of the RPG Group, recently carved out its API operations into a separate subsidiary, RPG Active Pharma, and brought in healthcare-focused private equity investor InvAscent as a strategic partner. The PE firm invested Rs.243 crore for a 40 percent stake, creating a capital pool of about Rs.700 crore to fund future expansion.

In quick succession, RPG completed the acquisition of two API assets, Actis Generics and the API and intermediates business of Raghava Life Sciences, significantly expanding its manufacturing footprint and product portfolio. The deals increased API manufacturing capacity nearly five-fold, from 110 KL to 505 KL, while expanding the company's pipeline from 12 to 28 molecules.

"We moved with speed and conviction. In just a few weeks we created RPG Active Pharma, brought in InvAscent as a strategic partner and completed two acquisitions," Nair told Moneycontrol. "Our API business has now become a strong growth driver."

The expansion may not stop there. Ashok Nair said the company is actively evaluating another acquisition and expects to deploy part of the nearly Rs.500 crore of unutilised capital available for the API platform.

"We would like to acquire another asset within the next 12 months that complements what we are doing," he said, adding that the company would prefer facilities with strong strategic fit and international regulatory approvals.

RPG Life Sciences is trying to do a catch up with peers on APIs. The company has been late on scaling up, but it is trying to bridge the gap through inorganic expansion.

Long runway for API business

Management sees a long runway for the API business amid global efforts to diversify pharmaceutical supply chains away from concentrated sourcing bases.

"The global API market is about $270 billion and growing steadily. Customers are increasingly looking to diversify supply chains, while India continues to benefit from the Make in India push," Nair said.

The company is targeting a 25 percent annual growth rate in APIs over the next five years, driven by better utilisation of acquired assets, new product launches, exports and selective acquisitions. RPG expects the newly acquired plants to contribute Rs.70-80 crore in revenue over the next six months, with meaningful contributions beginning from the third quarter of FY27.

Nair said the existing API manufacturing base itself has the potential to generate around Rs.450 crore in revenue without significant additional capital expenditure.

According to data from the Department of Pharmaceuticals, the Indian API market is valued at $15.28 billion in FY26 and is projected to expand at an annual rate of roughly 8 percent to touch $22.18 billion by 2031. Currently, exports account for nearly 35 percent of India's total production, supplying both globally regulated and semi-regulated markets.

While the industry is led by established giants—including Divi's Laboratories, Aurobindo Pharma, Dr. Reddy's, Laurus Labs, Aarti Drugs, Hetero Labs, Granules, and Neuland who are increasingly benefiting as Western pharmaceutical companies shift multi-year contracts toward India to de-risk their supply chains.

Domestic branded formulation business remains resilient

The API push comes even as RPG's core domestic formulations business continues to outperform the broader pharmaceutical market. In the September quarter, domestic formulations grew 11.6 percent, making RPG the fourth-fastest-growing company in the Indian pharmaceutical market and helping it enter the industry's top-50 rankings.

A key highlight was the performance of flagship pain-management brand Naprosyn, which crossed the Rs.100-crore annual sales milestone and continues to grow at double-digit rates.

"Naprosyn has been a very deliberate brand-building story. We sharpened our focus on orthopaedics, significantly expanded doctor coverage and invested in scientific engagement," Nair said. "The brand never lost momentum and has now crossed ₹100 crore."

RPG reported a 16.5 percent rise in second-quarter revenue to Rs.211.6 crore and a record adjusted EBITDA of Rs.50.1 crore. The company expects both formulations and APIs to contribute to sustained growth going forward.

"We will continue to strengthen domestic formulations while systematically scaling the expanded API business," Nair said. "With the capital, assets and partnerships now in place, we have a clear path to building a substantially larger API business."