Hyderabad firm builds over ₹400 crore pharma biz, without a factory

HRV Pharma owns drug master files and customer relationships while outsourcing production to 53 manufacturing partners, aiming to scale without owning factories

Pharmaceutical hub Hyderabad is quietly witnessing a business innovation that could tackle excess production capacity in the sector.

 

As parts of India’s upstream bulk drug industry grapple with under-utilised capacity despite years of investment, Hyderabad-based HRV Pharma is pursuing an unconventional strategy: building a bulk drug business without owning a manufacturing plant. 

In an industry where scale is typically measured by reactors, manufacturing blocks and regulatory-approved plants, Hyderabad’s HRV Pharma is trying something different: building an active pharmaceutical ingredient (API) business without owning a factory. 

The company, which works with more than 50 US Food and Drug Administration (USFDA)- and European Union Good Manufacturing Practice (EU GMP)-approved manufacturing partners, says it has grown revenue by 60-65 per cent annually over the past five years. It serves more than 700 active customers globally and is targeting ₹1,000 crore in revenue by financial year 2027-28 (FY28). 

The company ended FY25 with revenues of over ₹400 crore. It is eyeing ₹550 crore revenues in FY27. 

Hari Kiran Chereddi, managing director and chief executive officer of HRV Pharma, didn’t wish to disclose the precise details about the unlisted company. At the heart of the model is a bet that ownership of regulatory filings and customer relationships can be more valuable than ownership of manufacturing assets. 

“We are a virtual API platform, probably the first in the world,” said Chereddi. “How can I underwrite capacities, control the product, and also control the customer from this process? Today, that combination makes our model very different from anything seen in Indian pharma.” 

The asset-light structure has also allowed HRV to scale without raising external capital. “The company was started with ₹1 lakh, and that is the only amount I invested into it,” Chereddi said, describing the business as “a classic bootstrap story”. The company remains debt-free and has not raised money from private equity investors, he claimed. 

The idea emerged from a structural feature of India’s API industry. According to Chereddi, India has more than 650 USFDA- or EU GMP-approved API plants, many of which are operating significantly below capacity. 

“There is an abundance of such capacities in India,” he said. 

“A recent report says capacity utilisation is anywhere between 50 and 55 per cent in each of those plants.”

While companies invested heavily in capacity expansion following the China+1 shift, profitability in several products continues to be influenced by fluctuations in Chinese raw material prices and imports. 

Over the past few years, companies including Aurobindo Pharma, Divis Laboratories, Laurus Labs, Granules India and others have expanded API and intermediate manufacturing capacities, aided by China+1 opportunities and government incentives. Under the bulk drug Production-Linked Incentive (PLI) scheme alone, 32 companies have been selected for 48 greenfield projects covering 33 APIs, drug intermediates and key starting materials, with cumulative investments reaching more than ₹4,800 crore by December 2025. 

Instead of investing in manufacturing infrastructure, HRV develops products, owns Drug Master Files (DMFs), manages customer relationships and contracts production to approved partner facilities.

 

A DMF is a confidential regulatory dossier that contains details of an API’s manufacturing process, quality controls and stability data. Submitted to regulators such as the USFDA, it is a key reference document for formulation companies seeking approval for finished-dose medicines. Control over a DMF can, therefore, provide an API supplier with access to regulated markets and long-term customer relationships. 

“For a formulator, we are also an API company because we are the ones who own the regulatory documentation,” Chereddi said. 

“For an API manufacturing site, we become their capacity aggregator because, for them, we become the customer.”

Customers can reference HRV’s DMFs in their regulatory filings, allowing the company to position itself as the API supplier even though production is carried out by partner facilities. 

“Our DMF can go into their finished dose file, which can go to the regulatory authority and get approved, identifying HRV Pharma as the API supplier,” Chereddi said. 

He believes the model can be scaled globally without the need to build manufacturing assets in every market. 

The company already has teams in Dubai, Switzerland, the US and Mexico, alongside its India operations, and says it works across 55 countries. 

“The plan is to have a hub-and-spoke model,” he said. 

“We are not a retail outfit, so every country does not need a showroom.” 

The company currently has agreements with 53 manufacturing partners and plans to expand the network further. Yet Chereddi argues that adding factories is not the primary growth lever. 

“We are not an intermediate player,” he said. “What is missing in such models is the regulatory and quality aspect.” The structure also keeps capital requirements low. 

“We are a zero fixed asset company,” Chereddi said. 

“We do not have a physical manufacturing site.” Whether the approach can be scaled across a larger share of India's API industry remains to be seen. While the model is still evolving, HRV is seeking to demonstrate that in an industry long defined by plants and production capacity, regulatory ownership and market access can be scalable assets in their own right.

 

HRV Pharma at a glance

• Revenue growth: 60-65% CAGR over the last five years
• Active customers: 700+ globally
• Manufacturing partners: 53
• Countries served: 55
• US DMFs owned: 50+
• PAT margin FY26: ~13.5% (subject to audit)
• ROCE: ~60%
• Working capital cycle: Negative 10 days
• Debt: Nil
• Manufacturing plants owned: 0
• Revenue target: ₹1,000 crore