In an effort to reduce dependence on Chinese contractors for pharmaceutical research and early-stage manufacturing, drugmakers are turning to alternatives in India, according to insights from 10 industry executives and experts. China has been a favored location for pharmaceutical services due to cost-efficiency and rapid production by contract drugmakers for nearly two decades.
Despite challenges like the US-China trade war and pandemic-related disruptions, the pharmaceutical industry’s reliance on China remained largely intact. However, escalating tensions with China have led Western governments to advise companies to diversify their supply chains. This has prompted biotech companies to explore manufacturers in India for producing active pharmaceutical ingredients (API) for clinical trials and outsourced work.
Tommy Erdei, Global Co-Head of Healthcare Investment Banking at Jefferies, noted a shift away from sending requests for proposal (RFP) to Chinese companies due to geopolitical concerns. Biotech firms like Glyscend Therapeutics are considering Indian contract development and manufacturing organizations (CDMOs) for future RFPs, emphasizing the diminishing attractiveness of China as an option.
Major Indian CDMOs, including Syngene, Aragen Life Sciences, Piramal Pharma Solutions, and Sai Life Sciences, reported increased interest and requests from Western pharma companies, with some seeking India as a secondary manufacturing source or looking to transition away from China. While immediate benefits may not be realized, Indian manufacturers anticipate long-term advantages as early-stage treatments progress to market-ready stages.
India aims to enhance its presence in the pharma services sector, with concerns about oversight still prevalent. The sector has shown strong growth, with Indian CDMOs expecting increased revenue, as estimated by research firm Mordor Intelligence. However, challenges persist, and efforts to align with Western quality standards are emphasized.
Despite potential opportunities, the shift in the pharmaceutical supply chain landscape is gradual, with companies considering a multi-year timeline for complex transitions, such as biologic drug manufacturing. The ongoing trend underscores India’s endeavor to establish itself as a reliable and competitive player in the pharmaceutical industry.
