Reliance Life to enter global generic space

MUMBAI: Reliance Life Sciences (RLS) is planning to introduce its first generic drug by 2009 in international markets, including the US and Europe, where it will be competing with domestic pharma majors like Ranbaxy Lab and Sun Pharma, along with global drug giants such as Teva or Mylan.

“We are looking at capital intensive products across all therapeutic segments, where we could have a competitive advantage,” said Reliance Life Sciences president KV Subramaniam. “These drugs are, however, still at the research phase.”

The group had announced plans last year to foray into the generic drug market through Reliance Life Sciences’ newly set up wholly-owned subsidiary Reliance Pharmaceuticals. It will manufacture Active Pharmaceuticals Ingredients (APIs) and generic medicines for the US and European markets and countries across South-East Asia, Africa and CIS. The company has no plans for the moment to cater to the domestic pharma market. “The opportunity is outside India,” said Mr Subramaniam.

Reliance Life Sciences will, however, not be taking its drugs alone to the market. “To start with, we will look for partners to market our drugs, as setting up our own distribution and marketing facilities outside India involves significant costs.” Reliance will soon set up its manufacturing facility in India. “We will be setting up a plant at one of our four SEZ,” said Mr Subramaniam. Reliance has SEZ in Navi Mumbai, Maha Mumbai, Haryana and in Gujarat (Jamnagar). “We have not yet finalised our plans,” he added.

Reliance will be entering a very competitive market — the US generic market is reeling under pricing pressure and increasing competition while in Europe, countries like France and German have seen recently seen price cuts. According to analysts, generic drugs are launched at 5-10% of innovator’s price in the US market. Semi-regulated markets across Asia, Africa, Latin America, Eastern and Central Europe and CIS countries may offer better growth perspectives, analysts feel.

“Reliance will need to scale up its business rapidly to be profitable,” said an analyst who did not wish to be named. “One way to do it, would be to acquire a big Indian or international player with global manufacturing and distribution capabilities. While valuations are high in the sector and assets for sales are scarce, Reliance has the financial muscle to complete large acquisitions.” Mr Subramian, however, said that at this point of time, the company was not looking for inorganic growth opportunities.
“Reliance could also opt for a business model similar to that of Cipla’s,” said an analyst. While Cipla has no facilities outside India, its caters to international markets through tie ups with global partners. “However, it will take time for Reliance to get supplying contracts, as building a relationship with distributors takes some time. If successful, it could, however, be serious competition to smaller players, which are in the contract manufacturing space for off-patented drugs.”

They include companies such as Alembic, Indoco Remedies or Shasun Chemicals & Drugs, to name a few. Reliance Life Sciences already caters to the hospital segment in India through its biopharmaceutical division. It markets five generic products in India and expects to launch two more oncology drugs before the end of this financial year. “We are hoping to export biosimilars to Europe by the end of 2008,” said Mr Subramaniam. While the regulatory frame work for generic versions of biopharmaceutical drugs, also known as biogenerics, was recently set up in Europe, the US is yet to allow them. These drugs are manufactured out of a pilot facility in Navi Mumbai.