Indian drugmakers benefit from interest beyond China
Reuters
Drug manufacturers are seeking to limit their reliance on Chinese contractors to produce drugs for clinical trials and early-stage manufacturing, a move that is benefiting Indian companies, executives and experts say.
Factors such as low cost and speed made contract drugmakers in the People’s Republic of China (PRC) the preferred option for pharmaceutical research and manufacturing services for nearly 20 years. That largely held true despite global supply chain disruptions caused by the COVID-19 pandemic. Increasing tensions with Beijing, however, are prompting more governments to recommend that companies “de-risk” supply chains from the PRC.
That is leading biotech companies to consider using manufacturers in India to produce active pharmaceutical ingredients for clinical trials or other outsourced work.
“Today, you’re probably not sending an RFP [request for proposal] to a Chinese company,” said Tommy Erdei, global co-head of healthcare investment banking at Jefferies, a New York-based investment banking firm. “It’s like, ‘I don’t want to know, it doesn’t matter if they can do it for cheaper, I’m not going to start putting my product into China.’”
Dr. Ashish Nimgaonkar, the founder of Glyscend Therapeutics, a United States-based biotech firm testing treatments for Type 2 diabetes and obesity in early trials, agreed. “All of the factors over the past several years have made China a less attractive option for us,” he said.
Indian contract development and manufacturing organizations (CDMOs) will be preferred when Glyscend requests proposals later in the drug development stage, Nimgaonkar said.
Four of India’s largest CDMOs — Syngene, Aragen Life Sciences, Piramal Pharma Solutions and Sai Life Sciences — said interest and requests from Western pharmaceutical companies, including multinationals, have increased in 2023.
Executives at the firms said some customers want to add India as a second manufacturing source, while others are seeking to leave the PRC and originate their supply chains in India.
India is seeking a bigger foothold to boost sales for its $42 billion pharmaceuticals industry.
India-based research firm Mordor Intelligence estimates revenue from the nation’s CDMO industry at $15.6 billion in 2023, compared to $27.1 billion in the PRC. However, India’s annual revenue growth is projected to exceed 11% over the next five years, compared to the PRC’s average of 9.6%.
Sai Life Sciences said it has almost doubled manufacturing capacity since 2019, with an additional 25% expansion planned in the coming year or so.
Ramesh Subramanian, chief commercial officer of Aragen, which has grown from 2,500 to 4,500 employees in the past five years, said revenue growth of 21% in 2022 was partly driven by new contracts with Western biotech firms.
