RPG Life Sciences has spent ₹215 crore buying two active pharmaceutical ingredient (API) makers in the space of five weeks—an aggressive run for a company owned by a group known for watching every rupee of capital.
And it is not done. The drugmaker has a further ₹700 crore earmarked for inorganic growth, and is already hunting larger targets.
Driving the spree is a bet on how the world buys its medicines now. "The conversations are not around India versus China," managing director Ashok Nair told Mint. "China continues to remain a part of the global pharma supply." What has changed, he said, is that customers want sourcing diversification and reduced concentration—the essence of the ‘China plus one’ strategy—and ‘India is well positioned to benefit from this trend’, helped by government incentives.
RPG is a trusted supplier for some APIs, but by integrating backwards into key ingredients, it hopes to ink long-term contracts.
That is the gauntlet RPG has picked up. Under a group whose leadership, in Nair's telling, "continuously keeps reviewing costs and capital costs," the ₹707-crore company has swung from caution to conviction, backing capacity in a business most large Indian drugmakers quietly run but rarely talk up.
"We have grown from ₹200 crore to ₹700 crore in the last five years," Nair said. "What we are looking at is how we move to ₹1,000 crore soon." Inorganic growth was always on the cards, he added, but the pace has quickened since he took charge 14 months ago. "The speed has increased, and the sense of urgency. Our appetite is more."
The buying is routed through RP
G Active Pharma (RPGAP) is the subsidiary into which RPG carved out its API operations in late July. The same day, it brought in healthcare private-equity firm InvAscent, which is investing ₹243 crore for a 40% stake; together, the partners have committed up to ₹700 crore, earmarked largely for acquisitions.
The money moved fast. RPGAP first agreed to buy Visakhapatnam-based Actis Generics, a maker of intermediates and key starting materials, for ₹80 crore. Five weeks later, it signed an agreement to acquire the API and intermediates business of Raghava Life Sciences for up to ₹135 crore, adding an EU-GMP- and WHO-GMP-approved plant near Hyderabad and 29 molecules. The two deals have lifted RPGAP's capacity nearly fivefold, from about 110 kilolitres to roughly 505 kl.
They also fit together. Actis supplies intermediates for complex molecules such as rivaroxaban and apixaban; Raghava makes the finished APIs. "We have gone down that path, and that's where all the value is," Nair said, describing a deliberate move to integrate backwards down the chemistry chain rather than simply add tonnage.
His case rests on the economics of APIs, which he argues are far less crowded than finished formulations. "API still continues to be a play where it is niche and super-special," he said, citing rivaroxaban, whose synthesis runs to 17 steps. ‘There are very few organisations [that] can do’ it—a barrier that limits competition and props up prices in a way the first-to-file scramble in formulations does not. Nair pegs the Indian API market at ‘upwards of ₹1 trillion’, growing about 8% a year, with India already the third-largest producer globally—a pool the government's production-linked incentive (PLI) scheme is helping the country capture.
Rapid capacity expansion down the supply chain
Brokerages are buying the story. ICICI Securities rates the stock ‘Buy’ with a 12-month target of ₹3,205—roughly 20% above the current price—at 34 times projected FY28 earnings. In a 4 September note, lead analyst Siddhant Khandekar wrote that the deals position APIs as ‘a key medium-term growth driver, with a potential for further value unlocking’.
Khandekar was blunt about what comes next: "We expect some more deals in the API space in the near future." Khandekar reckons Raghava's plant, which earned about ₹19 crore last year, could support close to ₹200 crore at fuller utilisation, though he flagged the ‘delay in integration of new API businesses’ as a key risk—a reminder that the two units together brought in only about ₹70 crore last year.
The acquisitions bring capability expansion, and the company expects the ramp-up to occur over the next 18 months.
RPG's move matters less for its size— ₹215 crore is small by pharma M&A standards—than for who is making it. If a mid-sized, capital-conservative player sees enough in China-plus-one to build a dedicated, PE-funded acquisition platform, the thesis has broadened well beyond the big generic houses.
The heavyweights are already in: Hyderabad-based Aurobindo Pharma, through a subsidiary, has ploughed upwards of ₹2,500 crore into a Penicillin G plant at Kakinada under PLI—chasing a market India had all but ceded to China, which supplied the bulk of the over ₹2,000 crore of Penicillin G the country imported in FY24.
For now, Nair is keeping his powder partly dry—but not by much. "We still have a kitty of around ₹500 to ₹700 crore with us," he said, and the company is scouting larger assets, potentially including USFDA-approved capacity, though he insists ‘valuation discipline is maintained’. The ambition, he said, is to build "a multi-site API company with strength across chemistry, manufacturing, product approval, R&D and customer relationships"—an expansive statement of intent from a group where capital has always been guarded.