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-
lars, small molecule oncology products and vaccines.
In phase II, there will also be commercial scale manu-
facturing facilities for gene therapy (a way to modify
a person’s genes to cure diseases) and mRNA (a single
stranded molecule carrying instructions to make pro-
teins) products.” A biosimilar is a biological medicine
that is highly similar to another that has already been
approved by regulators.
Once these products get to even higher volumes in
the market, there is the ability to expand the manufac-
turing facilities in the Nashik campus.
The bet on higher volumes is a reflection of the dy-
namics of the biopharmaceuticals segment, which is
growing at an impressive 25 per cent annually.
With the campus coming up and a host of ambi-
tious plans to go with it, the outlook is understandably
buoyant. “Reliance Life Sciences, while continuing to
strengthen the foundation it has created in medical
biotechnology products, has taken up several novel ini-
tiatives in vaccines, peptides, gene and cell therapies,
mRNA and oligonucleotides. In the process, it would
be graduating its profile from making life-saving drugs
mostly to treat patients in intensive and critical care in
hospitals to addressing unmet medical needs in rare
genetic diseases and disorders,” Mukesh Ambani, Re-
liance Industries’ Chairman and Managing Director,
tells Business Today. Peptides are strings of amino acids
that are called the building blocks of proteins.
BREAKING IT DOWN
The buoyant mood is underpinned by a business that
has been grown patiently and that is coming of age
now. It has been nurtured with some basic guidelines
that reflect the ethos of the group as a whole.
Many years ago, Ambani told Subramaniam, “If
you don’t invest in manufacturing, you will not get
scale.” Mega projects like Reliance’s Jamnagar refin-
ery or the one for petrochemicals in Hazira bear testi-
mony to this reasoning. “We make almost everything
Business Today 6 August 2023
that we sell and the approach has been to continuously
invest in manufacturing. The principle we follow is to do
it ahead of demand and that was one of the reasons for
investing in a new campus,” he points out.
But just what is the low-profile RLS all about? Accord-
ing to Subramaniam, 65, a three-decade veteran of the
group, the company, predominantly, has a play in medi-
cal biotechnology-based products and services. “Most
of the products we make are used in critical and inten-
sive care in hospitals. You will not find our products in
chemist shops,” he explains.
“Biotechnology is where we chose to be,” says Subra-
maniam, picking his words carefully. It is an area with
very good business potential, but for every success there | 91
are, quite literally, hundreds of failures.
The company is clear about addressing unmet medi-
cal needs, and there is absolutely no room for error.
“When you make a product, it goes into the body of
a person who is critical. For instance, Reteplase (our
product), is a clot buster for a patient [suffering from
cardiac arrest], or albumin is for trauma, accidents or
liver cases.”
Besides, it is a long-gestation business. But as Vinay
Ranade, the company’s CEO, puts it, “not as long as an
innovator product and not as short as a generic product.
Typically, we used to take four to five years and with
stringent regulations for something like biosimilars, it is
now at six to seven years.” An innovator product is one
that has a new chemical entity that has received a patent
on its chemical formulation or manufacturing process.
Generics, meanwhile, are pharmaceutical drugs that
contain the same chemical substance as a drug that was
originally protected by chemical patents.
In terms of numbers, RLS’s revenues have zoomed 25
per cent on an annualised basis over the last five years,
Subramaniam points out, while Ebitda (earnings be-
fore interest, taxes, depreciation, and amortisation) has
jumped 42 per cent (see chart A Tightly Run Ship). The
revenue for FY23 was around `2,400 crore or about $300
million, “with a valuation of $2 billion”.
 PHARMA RELIANCE LIFE SCIENCES
“We make almost everything
that we sell and the approach
has been to continuously
invest in manufacturing.
The principle is to do it ahead
of demand”
K.V. SUBRAMANIAM
PRESIDENT, RELIANCE
LIFE SCIENCES
“India needs three to five big
examples of out-licensing to
bring a certain level of confi-
dence. The number of clinical
trials is slowly increasing and
that is a positive”
92 |
UTKARSH PALNITKAR
INDEPENDENT LIFE SCIENCES
CONSULTANT
The company has a portfolio of right. “We would ask ourselves if
43 products (30 more in the pipe- we could develop it well. Now, we
line, all of them niche) across seg- are confident about the manufac-
ments, which are prescribed by turing and controls aspects. You
specialists and super-specialists. must be open and flexible to make
They are exported to over 50 coun- improvements as you go.”
tries (making up 38 per cent of rev-
enues)—including highly regulated A FEW BIG PLAYERS
markets like the US and Europe, Those patient efforts are poised to
primarily for small molecules. help the company as the industry it is
“Our approach has been to develop in looks to be at the cusp of a growth
products and take it wherever there spurt. Consider these numbers:
is a market, as opposed to making it Globally, per research studies, phar-
specifically for, say, oncology, car- maceuticals is a $1.5-trillion market
diology and nephrology.” and growing by 4 per cent, while
It’s not as if this ability to scale biopharmaceuticals is a $120-bil-
came overnight. Ranade says for lion market, but growing twice as
over eight to 10 years the company fast as pharmaceuticals. The Indian
grappled with getting its products biopharmaceuticals market is a
Business Today 6 August 2023
fraction of that at $300 million but
growing at 25 per cent. And there
are serious entry barriers at play
here. “Biosimilars with extensive
characterisation take time [to pro-
duce]. The manufacture of plasma
proteins involves know-how and
that is the reason that the industry
globally is an oligopoly with 11-12
players,” explains Subramaniam.
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
Biocon (though RLS does not make
insulin); Intas for plasma proteins;
Natco and Dr. Reddy’s and others in
small molecules; and, many in the
sphere of diagnostics, a space that
the company has recently entered.
“There are a few companies in
gene therapy. In the case of Re-
teplase, an even smaller number
since it is difficult to manufacture,”
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
million to as much as $3–4 million.
“We want to bring down costs sub-
stantially and are working aggres-
sively to deliver gene therapies in a
very cost-competitive manner.”
But when companies get the ba-
sics right, there is immense poten-
tial here, per experts.
Utkarsh Palnitkar, an indepen-
dent life sciences consultant, says
the future is bright given India’s
population. “Inevitably, the pace
of activity on life sciences too will
pick up. What is needed is the incen-
tive to invest large amounts in R&D
(research and development),” he
says. The challenge is the high cost
matched with the confidence that it
will generate revenue. “India needs
three to five big examples of out-licensing to bring a cer-
tain level of confidence. The number of clinical trials is
slowly increasing and that is a positive.” A lot of money
goes into developing novel products and these have in-
herent risks because “a molecule can get rejected at any
stage of development”.
There is work to be done here, though, and perhaps a
fair bit of investment. Rajesh Pherwani, Founder of Val-
create Investment Managers, a portfolio management
services firm, says, “A lot of research needs to be done to
develop and get approvals in developed markets.” For an
Indian company to launch its own product in the US and
EU, the outgo is significant. “It may require investments
of $100–200 million per product till commercialisation.
Gross margins are very attractive in the US, but R&D is a
big investment to be made upfront for backend benefits.”
Closer home, the potential may take some time to
translate into numbers because biosimilars adoption
is still a while away in India. “Biocon (the company has
a tie-up with Mylan for regulated markets apart from
having acquired its biosimilars business early this year
for $3.3 billion) and Lupin are the only companies that
targeted regulated markets in the early days of patent
expiry (2020-24) and both are yet to rake in meaningful
numbers. Dr. Reddy’s too has a pipeline but that will take
time,” points out Pherwani.
Emerging markets and the EU provide potentially
easier pathways to launch, though the largest market is
the US. There is also an immediate window of opportu-
nity here because the value of patent expiries in the US is
to the tune of $60 billion between 2020 and 2024 and an-
other $10 billion in the EU. “The only way Indian compa-
nies can make a quick entry into the US is inorganically.”
CONSOLIDATION TIME
RLS is now looking to strengthen the existing areas of
businesses, while scouting for new opportunities. “One
is diagnostics, where we want to have an all-India labo-
ratory-based network model. This is being incubated and
we are starting off in a small way,” says Subramaniam.
Then there is its vaccine play, a segment it ventured
into after the outbreak of the pandemic. “Here, we want
to be in both human and animal vaccines. Finally, there
is a space in innovative technologies, where work is be-
ing done on several gene therapies, peptides and mRNA
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