In the ever-evolving landscape of pharmaceutical manufacturing, the term CDMO, which stands for Contract Development and Manufacturing Organization, has become a central topic in business discussions. These adaptable third-party service providers are integral to the entire medicine production process, offering expertise in research, development, manufacturing, and final formulation. As the demand for these services surges, particularly in India, the CDMO sector is poised for significant growth.

The Booming CDMO Market in India

India’s CDMO market is on an impressive growth path, fueled by a mix of competitive pricing, advanced technologies, and a robust regulatory environment. A recent report from the Boston Consulting Group (BCG) highlights that India is set to capture a 4-5% share of the global CDMO market, establishing the country as a prime outsourcing destination for pharmaceutical development and manufacturing.

• Global Market Growth: The worldwide CDMO market was valued at $242.62 billion in 2024 and is projected to soar to $465.14 billion by 2032, reflecting a CAGR of 8.5%.
• New Drug Modalities: The BCG report anticipates that the market for new drug modalities will reach $20 billion by 2028.

Interestingly, the demand for CDMO services has surged, with some Indian firms experiencing a 50% increase in Requests for Proposals (RFPs) in 2024. This growth is largely attributed to global pharmaceutical companies seeking to diversify their supply chains and reduce reliance on China.

India: A Preferred Destination for Pharmaceutical Manufacturing

Experts predict that India and other Asian players will significantly contribute to the global CDMO landscape by providing scalable and cost-effective solutions for specialized drug development. The BCG report indicates that India is an attractive hub for drug manufacturing, offering services at about 20% lower costs than its Chinese counterparts.

Key advantages for India’s CDMO sector include:

• Robust Infrastructure: Strong adherence to global regulatory standards.
• Skilled Workforce: A large pool of English-speaking scientists and professionals.
• Government Support: Initiatives like the Production Linked Incentive (PLI) Scheme bolster domestic manufacturing.

While China has traditionally dominated the CDMO sector due to its large-scale production capabilities, geopolitical tensions and trade restrictions have prompted global pharmaceutical firms to reconsider their strategies, making India an appealing alternative for bulk drug manufacturing.

According to India Briefing, India boasts around 650 USFDA-approved facilities, accounting for 25% of such plants outside the U.S. This is attributed to significantly lower manufacturing costs compared to Western nations and a skilled workforce that facilitates collaboration with international pharmaceutical companies.

Increasing Dependence on CDMO Services

As the CDMO industry expands, pharmaceutical companies are becoming increasingly reliant on these organizations. A report by B&K Securities notes that the drug development sector is evolving rapidly, and outsourcing to CDMOs is likely to continue rising. India finds itself in a favorable position due to geopolitical uncertainties, investments in capacity, and a cost structure conducive to substantial returns.

• Types of CDMO Players:
  • Players at Scale: Major firms with significant purchasing power and the ability to expand quickly.
  • Extenders: Companies investing in adjacent growth areas.
  • Complementors: Smaller, specialized firms focusing on niche markets.

Leading players in the Indian CDMO sector include Piramal Pharma Solutions, Syngene International, and Dr. Reddy’s Laboratories, while emerging companies like Biocon are carving out niches in specialized areas such as biologics and vaccines.

Major Investments Driving Growth

Numerous leading CDMOs in India are making substantial investments to enhance their capabilities:

• Aurigene Pharmaceutical Services: A subsidiary of Dr. Reddy’s, has launched a biologics facility in Hyderabad’s Genome Valley aimed at producing therapeutic proteins and antibodies.
• Aragen Life Sciences: Invested Rs 20 billion (approximately $230.5 million) in Telangana to expand drug discovery and manufacturing capabilities.
• Divi’s Laboratories: Commenced operations on a three-unit project in Kakinada, Andhra Pradesh, with significant growth plans.
• Laurus Labs: Engaged in a Rs 9.9 billion ($114.1 million) expansion to shift focus towards antiretrovirals.
• Jubilant Pharmova: Committed $370 million to enhance sterile injectable capacity in North America.

With the increasing focus on CDMOs and rising investments, the pharmaceutical industry in India is poised to capitalize on this expanding market opportunity.

The future looks promising as India positions itself as a critical player in the global CDMO arena, ready to meet the growing demands of pharmaceutical companies worldwide.