Right here’s an acronym that you simply most likely hear nearly on a regular basis on enterprise tv – CDMO. Contract Growth and Manufacturing Group (CDMO) are versatile third-party service suppliers which can be entrusted with all of the phases of the method of constructing medicines – offering companies within the analysis and improvement phases, providing assist in manufacturing, and offering formulating and ending processes.
The rise of CDMO market
India’s Contract Growth and Manufacturing Group (CDMO) market is witnessing a powerful development trajectory pushed by a confluence of things, together with value benefits, technological developments, and a powerful regulatory framework. In response to a report by Boston Consulting Group (BCG), the sector is poised to safe a 4-5 per cent share of the worldwide CDMO market thereby strengthening India’s place as a most popular outsourcing hub for pharmaceutical manufacturing and improvement.
Per Fortune Enterprise Perception, the worldwide CDMO market measurement was valued at $242.62 billion in 2024 and is predicted to develop to $465.14 billion by 2032, reporting a CAGR of 8.5 per cent throughout the forecast interval. In the meantime, the BCG report estimated the worth of the worldwide CDMO marketplace for new drug modalities to succeed in $20 billion by 2028.
Curiously, whereas we’re speaking concerning the development of the section, BCG had famous that some Indian CDMOs, in 2024, witnessed a 50 % year-on-year surge in Requests for Proposals (RFPs). This was as a result of the worldwide pharmaceutical corporations sought to diversify their provide chains and mitigate dangers related to over-reliance on China.
The final decade has seen a substantial rise in CDMOs with an more and more dynamic mergers and acquisition (M&A) panorama pushed by consolidation.
India a most popular hub for drug manufacturing
Trade specialists are optimistic that India and different Asian gamers will emerge as key contributors to the worldwide CDMO market, whereas providing scalable and cost-effective options to satisfy the growing demand for specialised drug improvement. The BCG report stated that India has already emerged as a extremely enticing vacation spot for drug improvement and manufacturing because it presents pharmaceutical companies priced round 20 per cent decrease than these of Chinese language opponents. The arrogance in India’s pharma manufacturing capabilities can be the courtesy of its strong infrastructure, adherence to world regulatory requirements, and in depth expertise pool. Additionally, India’s authorities has been proactive in supporting the pharma sector, providing incentives such because the Manufacturing Linked Incentive (PLI) Scheme and Nationwide Coverage on Prescription drugs to spice up home manufacturing.
Whereas India has the fee benefit, China has lengthy dominated the CDMO sector because of its large-scale API manufacturing, cost-effective labor, and robust authorities assist. Nonetheless, a lot to India’s profit, geopolitical tensions, commerce restrictions, and COVID-related disruptions led pharma corporations around the globe to rethink their dependence on China. Because of this, India emerged as a powerful various for bulk drug manufacturing.
As acknowledged by India Briefing in a report, India has round 650 USFDA-approved vegetation, constituting 1 / 4 of all such amenities exterior the USA. Now that is primarily because of value effectivity with manufacturing bills within the nation being considerably decrease than in Western nations and round 20 per cent lesser than China. One other issue is availability of expert workforce, with a big pool of English-speaking scientists and professionals facilitating collaboration with world pharmaceutical corporations.
All these benefits pave the best way for India to seize a major share of the growth of the worldwide CDMO market. In response to a world market report, whereas the US stays the biggest CDMO market, valued at $54.21 billion in 2023, India’s quicker development price is positioning it as a future chief within the business.
An evaluation report by B&Okay Securities stated, “Indian CDMO corporations will proceed to profit from benign world macros within the type of elevated RFQs, beneficial USD/INR motion, sustained outsourcing methods by large pharma, China+1 diversification by world pharma stakeholders.”
Additional, India’s pharma business can be extra diversified in comparison with China’s, with a powerful foothold in generics, biotech, and biosimilars.
Dependency on CDMO on the rise
Whereas we mentioned the expansion of the CDMO business and alternative for India, an essential side is the dependency of the pharma corporations on CDMO. B&Okay Securities stated, “The drug improvement business is ever evolving and the dependency on CDMO is continually growing. Outsourcing will proceed to rise, with the Indian CDMO business in a candy spot because of geopolitical uncertainties, investments in capability and capabilities, and a decrease value construction that may generate sizeable returns.”
Contemplating the expansion potential and rising demand for CDMO corporations, pharma corporations too began foraying into the section thereby providing third-party companies in drug manufacturing.
Now based mostly on an evaluation by EY-Parthenon, there are three main CDMO archetypes: gamers at scale, extenders, and complementors.
Gamers at scale have the buying energy to maneuver into new areas rapidly, to broadly prolong their enterprise mannequin, and are usually already vastly built-in.
Extenders make investments closely in chosen segments alongside adjoining development trajectories.
Complementors are cautious expanders which can be usually small and extremely specialised and spend money on complementing areas.
Main CDMO gamers embrace Piramal Pharma Options, Syngene Worldwide, Dr Reddy’s Laboratories, Divi’s Laboratories, Lupin Restricted. Rising CDMO gamers, in the meantime, embrace Biocon and Piramal Pharma Options which can be specializing in specialised areas like biologics and vaccines.
Majors specializing in CDMO with further investments
A number of main CDMO corporations in India are making sizable investments to boost their capabilities and increase their service choices. For example, Aurigene Pharmaceutical Providers, a subsidiary of Dr Reddy’s, has established a biologics facility in Hyderabad’s Genome Valley to fabricate therapeutic proteins, antibodies, and viral vectors.
On January 17, 2024, Aragen Life Sciences invested Rs 20 billion ($230.5 million) in Telangana to increase its presence in drug discovery, improvement, and manufacturing.
Divi’s Laboratories is creating a three-unit mission inside a 500-acre manufacturing facility in Kakinada, Andhra Pradesh. The industrial operations below Part I, protecting 200 acres commenced in January 2025.
Laurus Labs, in the meantime, is present process a Rs 9.9 billion ($114.1 million) growth, shifting from API analysis to antiretrovirals and intermediates, with 60 per cent of its income generated from the US and European markets. Jubilant Pharmova, has dedicated $370 million to double its sterile injectable capability in Spokane and Montreal, reinforcing its place for development in North America.
With continued give attention to CDMO and investments growing within the sector, pharma corporations will proceed to money in on this rising alternative.
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