RPG Life Sciences – Transforming Business for Creating Value for Stakeholders

  • Company is intending for expanding its product footprints in emerging markets
  • Company is concentrating on expanding its API business
  • The API business remains strategically significant to RPG Lifesciences’ overall business growth
  • On the digitisation front, the company has started an innovative digital project called RPGserv

RPG Life Sciences Ltd is part RPG Enterprises. It is a a diversified pharmaceutical company that does business in both domestic and international markets. RPG Life Sciences products are used by more than 70,000 doctors across 52 countries for more than 10 treatments. Companies product relates to Nephrology, cancer, urology, and respiratory care etc.

RPG Lifesciences reported revenue of Rs. 440.16 crores for FY 2022. PBT increased by 37% and sales by 13%, on a full-year basis. EBITDA margin maintained its upward trajectory, increasing from 10.4% in FY19 to 15.9% in FY20 to 18.2% in FY21 to 20.3 percent in FY22.

In the targeted Chronic and Specialty segments, such as Nephrology, Rheumatology, Gastroenterology, Oncology, CVM, and Urology, the company is expanding its presence. Products like IroHigh, Azilta, DPO, DPO-M, Mirasmart-S, Solifirst, and Tamflo DFZ were among the new introductions during FY22. An impressive uptake is being seen by the company’s MABs portfolio, which has been built during recent years. The company has come up with a lifecycle management plan to develop its iconic and textbook brands into strategic assets.

The company is intending for expanding its product footprints in emerging markets like Myanmar, Vietnam, the Philippines, Sri Lanka, Egypt, and Sudan as part of its strategy for the International Formulations division. It is concentrating on growing its partnership with new clients in regulated markets. Through customer and market expansion of its existing as well as new molecules and backward integration for Formulations Business, the Company is concentrating on expanding its API business.

On the digitisation front, the company has started an innovative digital project called RPGserv, which is a  Doctor Support Initiative.  The company is growing its outreach to and engagement with doctors in a seamless manner and has expanded to include more than 58,000 doctors.

The Indian market has certain distinctive features. More than 70% of the retail market is made up of branded generics, whose costs are low because of intense competition. Due of their abilities to create formulations, early incumbents have dominated. India ranks third in volume even if its value ranking is far lower. Given that spending on medications is predicted to increase by roughly 10% annually over the next five years, India is predicted to rank among the top 10 countries in terms of expenditure. The government has placed a strong emphasis on cost-cutting measures to make healthcare more accessible, and generic pharmaceuticals continue to be a top priority. This portends good for domestic business.

Some of the key brands of the Company are identified under NLEM (National List of Essential Medicine) and the list of medicines under NLEM is growing. Additionally, a growing number of Fixed Dose Combinations (FDC) are being questioned. Entry into new geographies is becoming more difficult due to the increasingly strict regulatory environment around the world. The Medical Council of India’s directive to doctors to only prescribe generic versions of medications may have an effect on the branded generics.

On the opportunity side, industry will benefit from government policies including allowing 100 percent Foreign Direct Investment (FDI) in health and medical services. The National Health Policy 2017, which was unveiled by the Indian government, aims to achieve the highest levels of health and wellbeing for people of all ages by enhancing access, raising standards of treatment, and lowering costs. By 2025, the government also intends to increase healthcare spending to 2.25 percent of GDP. This is anticipated to enhance the pharmaceutical industry as well.

The chronic illness segments, such as those for cardiovascular, diabetes, derma, and cancer, are a major driver of industry growth, and changing lifestyles have a significant impact as well. Threats to industry participants include intense price competition in partially regulated markets, the entry of new local competitors who have an impact on the prices of branded generic drugs, delays in regulated authorities’ approval of manufacturing facilities, and increased regulatory intervention in price fixing for domestic formulations. In an effort to lessen reliance on imports, the Indian government has created the Production Linked Incentive (PLI) scheme to promote API. Future potential for the Indian pharmaceutical industry may result from this.

The API business remains strategically significant to RPG Lifesciences’ overall business growth. In order to reduce reliance on obtaining APIs from outside sources and boost supply reliability, backward integration of product is essential in the present competitive and external context. The government’s emphasis on manufacturing APIs and lowering its reliance on imports increases the strategic significance of the company. With foreign businesses considering India as a manufacturing hub for the global supply of APIs, business of RPG Life Science may expand significantly.

The company’s performance has improved as a consequence of consistent prescription generation, the expansion of the product portfolio through new product introductions. New launches in the cardiovascular, oncology, nephrology, diabetes, rheumatology, and urology divisions have strengthened the portfolio. According to data gathered by market research firm Pharmatrac, the company increased its position in the Indian pharmaceutical industry over the year, moving up to rank 66 in terms of sales value.

Company has a strong Corporate Governance and proven track record under the visionary leadership of Chairman, Harsh V. Goenka and Managing Director Mr Yugal Sikri.

Chairman Harsh V. Goenka stated that the company is well-positioned to build on the solid operational skills developed over the last several years in his address to the company’s shareholders in its annual report. In the coming years, the company will expand more and set new records.

Managing Director Mr Yugal Sikri said that RPG Life Sciences is driving transformative agenda. This involves Profitable growth through a well-defined strategic framework for all the three business segments i.e. Domestic Formulations, International Formulations and API.  Migration to higher margins, Building strategic assets and footprints. Company is working for Embracing digitalisation and innovation for transforming business and Strengthening organisation to deliver the core strategy.

RPG Life Sciences, according to Managing Director Mr. Yugal Sikri, is driving a transformative agenda. This includes profitable growth across all three business segments—domestic formulations, foreign formulations, and API. Company is transforming itself to improve margins and for creation of strategic assets.

RPG Life Sciences Ltd is a Small-cap firm and has a market cap of Rs 968 Cr as on 12 July. Share closed in BSE @ 585.55

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