A F T E R P AT I E N T N U R T U R I N G O V E R T W O D E C A D E S , R E L I A N C E L I F E

SCIENCES IS INVESTING IN A NEW PLANT AND LOOKING TO ENTER

N E W S E G M E N T S . T H E B I O T E C H N O L O GY P L AY E R C O U L D W E L L B E
T H E N E X T B I G T H I N G F R O M T H E R E L I A N C E S TA B L E
 I

IT’S A SCORCHING April afternoon

in Dindori, about 45 minutes by
road from Nashik. To make matters
worse, we are outdoors at a dusty
construction site. But the heat and
dust don’t seem to bother the proj-
ect teams that are focussed only on
their deadlines.
That’s because the teams have
their task cut out. In barely a year,
this place is set to become unrec-
PHOTO BY BANDEEP SINGH
ognisable as the first phase of the
fully integrated second manufac-
90 | turing campus of Reliance Life us relief from the heat. The cabin tiently nurtured its research and
Sciences (RLS)—the biotechnol- offers a full view of the 160-acre manufacturing capacity to become
ogy firm fully owned by investment campus housed in Maharashtra In- an end-to-end player, diversified its
companies of Mukesh Ambani—is dustrial Development Corporation presence across segments, and now
expected to be ready. Eventually, (MIDC) territory, in an area that is boasts of a portfolio of 43 products,
the project teams’ efforts are set to already a thriving business base for and a workforce of 1,300. Thanks
transform this undulating, rocky many marquee names of India Inc. to this, it has outgrown its current
terrain into a picturesque location, Though the typical Reliance 20-acre campus in Navi Mumbai,
with a lake to top it off. scale is evident, unlike with some of necessitating the Dindori project,
“Yes, it is an aggressive timeline its illustrious sister concerns, here for which it has earmarked `4,400
and we are on track so far,” says the it is also mixed with caution—to crore—half of that amount is set to
company’s President K.V. Subrama- paraphrase a Chinese proverb, this be utilised in the first phase.
niam, as he takes us to an air-condi- is a firm that is looking to cross the Explaining the rationale for the
tioned cabin (the ones you typically river by feeling for the stones. new facility, Subramaniam says,
see at sites like these), providing Incorporated in 2001, it has pa- “This is a larger commercial scale

`4,400 CRORE 43 PRODUCTS

THE OUTLAY FOR THE 160-ACRE FACILITY THE PRODUCT PORTFOLIO OF THE
AT DINDORI, NEAR NASHIK, THAT WILL COMPANY STRETCHING ACROSS
BE UTILISED OVER TWO PHASES ALL BUSINESS SEGMENTS

Business Today 6 August 2023

“Reliance Life Sciences... would be graduating from
making life-saving drugs mostly to treat patients
in intensive and critical care to addressing unmet
medical needs in rare genetic diseases”
MUKESH AMBANI, CHAIRMAN AND MANAGING DIRECTOR, RELIANCE INDUSTRIES LTD

facility for manufacturing plasma proteins, biosimi- that we sell and the approach has been to continuously
lars, small molecule oncology products and vaccines. invest in manufacturing. The principle we follow is to do
In phase II, there will also be commercial scale manu- it ahead of demand and that was one of the reasons for
facturing facilities for gene therapy (a way to modify investing in a new campus,” he points out.
a person’s genes to cure diseases) and mRNA (a single But just what is the low-profile RLS all about? Accord-
stranded molecule carrying instructions to make pro- ing to Subramaniam, 65, a three-decade veteran of the
teins) products.” A biosimilar is a biological medicine group, the company, predominantly, has a play in medi-
that is highly similar to another that has already been cal biotechnology-based products and services. “Most
approved by regulators. of the products we make are used in critical and inten-
Once these products get to even higher volumes in sive care in hospitals. You will not find our products in
the market, there is the ability to expand the manufac- chemist shops,” he explains.
turing facilities in the Nashik campus. “Biotechnology is where we chose to be,” says Subra-
The bet on higher volumes is a reflection of the dy- maniam, picking his words carefully. It is an area with
namics of the biopharmaceuticals segment, which is very good business potential, but for every success there | 91
growing at an impressive 25 per cent annually. are, quite literally, hundreds of failures.
With the campus coming up and a host of ambi- The company is clear about addressing unmet medi-
tious plans to go with it, the outlook is understandably cal needs, and there is absolutely no room for error.
buoyant. “Reliance Life Sciences, while continuing to “When you make a product, it goes into the body of
strengthen the foundation it has created in medical a person who is critical. For instance, Reteplase (our
biotechnology products, has taken up several novel ini- product), is a clot buster for a patient [suffering from
tiatives in vaccines, peptides, gene and cell therapies, cardiac arrest], or albumin is for trauma, accidents or
mRNA and oligonucleotides. In the process, it would liver cases.”
be graduating its profile from making life-saving drugs Besides, it is a long-gestation business. But as Vinay
mostly to treat patients in intensive and critical care in Ranade, the company’s CEO, puts it, “not as long as an
hospitals to addressing unmet medical needs in rare innovator product and not as short as a generic product.
genetic diseases and disorders,” Mukesh Ambani, Re- Typically, we used to take four to five years and with
liance Industries’ Chairman and Managing Director, stringent regulations for something like biosimilars, it is
tells Business Today. Peptides are strings of amino acids now at six to seven years.” An innovator product is one
that are called the building blocks of proteins. that has a new chemical entity that has received a patent
on its chemical formulation or manufacturing process.
BREAKING IT DOWN Generics, meanwhile, are pharmaceutical drugs that
The buoyant mood is underpinned by a business that contain the same chemical substance as a drug that was
has been grown patiently and that is coming of age originally protected by chemical patents.
now. It has been nurtured with some basic guidelines In terms of numbers, RLS’s revenues have zoomed 25
that reflect the ethos of the group as a whole. per cent on an annualised basis over the last five years,
Many years ago, Ambani told Subramaniam, “If Subramaniam points out, while Ebitda (earnings be-
you don’t invest in manufacturing, you will not get fore interest, taxes, depreciation, and amortisation) has
scale.” Mega projects like Reliance’s Jamnagar refin- jumped 42 per cent (see chart A Tightly Run Ship). The
ery or the one for petrochemicals in Hazira bear testi- revenue for FY23 was around `2,400 crore or about $300
mony to this reasoning. “We make almost everything million, “with a valuation of $2 billion”.

Business Today 6 August 2023

 PHARMA RELIANCE LIFE SCIENCES

“We make almost everything fraction of that at $300 million but

that we sell and the approach growing at 25 per cent. And there
are serious entry barriers at play
has been to continuously here. “Biosimilars with extensive
invest in manufacturing. characterisation take time [to pro-
The principle is to do it ahead duce]. The manufacture of plasma
proteins involves know-how and
of demand” that is the reason that the industry
globally is an oligopoly with 11-12
K.V. SUBRAMANIAM players,” explains Subramaniam.
PRESIDENT, RELIANCE
LIFE SCIENCES The uniqueness of the RLS
model is that it has chosen to diver-
sify across segments, though that
means it has to contend with rivals.
For instance, in biosimilars, there is
“India needs three to five big Biocon (though RLS does not make
examples of out-licensing to insulin); Intas for plasma proteins;
bring a certain level of confi- Natco and Dr. Reddy’s and others in
small molecules; and, many in the
dence. The number of clinical sphere of diagnostics, a space that
trials is slowly increasing and the company has recently entered.
that is a positive” “There are a few companies in
92 | gene therapy. In the case of Re-
UTKARSH PALNITKAR teplase, an even smaller number
INDEPENDENT LIFE SCIENCES since it is difficult to manufacture,”
CONSULTANT Subramaniam tells BT. Besides, it
is equally important to make the
products affordable. Take gene
therapy for instance. The pricing in
the western world is between $0.5
The company has a portfolio of right. “We would ask ourselves if million to as much as $3–4 million.
43 products (30 more in the pipe- we could develop it well. Now, we “We want to bring down costs sub-
line, all of them niche) across seg- are confident about the manufac- stantially and are working aggres-
ments, which are prescribed by turing and controls aspects. You sively to deliver gene therapies in a
specialists and super-specialists. must be open and flexible to make very cost-competitive manner.”
They are exported to over 50 coun- improvements as you go.” But when companies get the ba-
tries (making up 38 per cent of rev- sics right, there is immense poten-
enues)—including highly regulated A FEW BIG PLAYERS tial here, per experts.
markets like the US and Europe, Those patient efforts are poised to Utkarsh Palnitkar, an indepen-
primarily for small molecules. help the company as the industry it is dent life sciences consultant, says
“Our approach has been to develop in looks to be at the cusp of a growth the future is bright given India’s
products and take it wherever there spurt. Consider these numbers: population. “Inevitably, the pace
is a market, as opposed to making it Globally, per research studies, phar- of activity on life sciences too will
specifically for, say, oncology, car- maceuticals is a $1.5-trillion market pick up. What is needed is the incen-
diology and nephrology.” and growing by 4 per cent, while tive to invest large amounts in R&D
It’s not as if this ability to scale biopharmaceuticals is a $120-bil- (research and development),” he
came overnight. Ranade says for lion market, but growing twice as says. The challenge is the high cost
over eight to 10 years the company fast as pharmaceuticals. The Indian matched with the confidence that it
grappled with getting its products biopharmaceuticals market is a will generate revenue. “India needs

Business Today 6 August 2023

three to five big examples of out-licensing to bring a cer- expiry (2020-24) and both are yet to rake in meaningful
tain level of confidence. The number of clinical trials is numbers. Dr. Reddy’s too has a pipeline but that will take
slowly increasing and that is a positive.” A lot of money time,” points out Pherwani.
goes into developing novel products and these have in- Emerging markets and the EU provide potentially
herent risks because “a molecule can get rejected at any easier pathways to launch, though the largest market is
stage of development”. the US. There is also an immediate window of opportu-
There is work to be done here, though, and perhaps a nity here because the value of patent expiries in the US is
fair bit of investment. Rajesh Pherwani, Founder of Val- to the tune of $60 billion between 2020 and 2024 and an-
create Investment Managers, a portfolio management other $10 billion in the EU. “The only way Indian compa-
services firm, says, “A lot of research needs to be done to nies can make a quick entry into the US is inorganically.”
develop and get approvals in developed markets.” For an
Indian company to launch its own product in the US and CONSOLIDATION TIME
EU, the outgo is significant. “It may require investments RLS is now looking to strengthen the existing areas of
of $100–200 million per product till commercialisation. businesses, while scouting for new opportunities. “One
Gross margins are very attractive in the US, but R&D is a is diagnostics, where we want to have an all-India labo-
big investment to be made upfront for backend benefits.” ratory-based network model. This is being incubated and
Closer home, the potential may take some time to we are starting off in a small way,” says Subramaniam.
translate into numbers because biosimilars adoption Then there is its vaccine play, a segment it ventured
is still a while away in India. “Biocon (the company has into after the outbreak of the pandemic. “Here, we want
a tie-up with Mylan for regulated markets apart from to be in both human and animal vaccines. Finally, there
having acquired its biosimilars business early this year is a space in innovative technologies, where work is be-
for $3.3 billion) and Lupin are the only companies that ing done on several gene therapies, peptides and mRNA
targeted regulated markets in the early days of patent products.” The uniqueness of RLS’s model is that it is end- | 93

A TIGHTLY RUN SHIP GROWTH SURGE

Reliance Life Sciences has seen its net 50
profits and margins soar
2,500 25%
40
2,000
20%
1,500
30
15%
1,000

500 10% 20

0
5% 10
-500

-1,000 0%
FY18 FY19 FY20 FY21 FY22 0
FY20 FY21 FY22
FIGURES IN ` CRORE OPERATING REVENUE EBITDA NET PROFIT NET WORTH RETURN ON EQUITY (%)
NET PROFIT MARGIN (RHS, IN PER CENT); EBITDA EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTISATION; SOURCE TOFLER SOURCE TOFLER

Business Today 6 August 2023