The contract manufacturing business in the Indian pharmaceutical industry is expected to grow significantly over the next three years. This growth is anticipated due to the US Biosecure Act, which aims to prevent US federal government entities from procuring equipment and services from Chinese pharmaceutical companies. As a result, there is a projected shift in manufacturing operations from China to India. 

According to the head of a pharmaceutical industry association, the contract manufacturing segment is likely to double in size within the next three years. Simultaneously, the contract research segment is forecasted to triple during the same period.  

According to experts, the implementation of the Biosecure Act by the US is expected to further accelerate the expansion of Contract Development and Manufacturing Organisations (CDMOs) and Contract Research Organisations (CROs) in India. For instance, Mordor Intelligence reports that the contract manufacturing segment in India is projected to grow from $22.51 billion in 2024 to $44.63 billion by 2029, with a compound annual growth rate (CAGR) of 14.67%. Similarly, the CRO segment in India has been growing at a CAGR of 10.75% and is forecasted to reach $2.5 billion by 2030, as per data from the Department of Pharmaceuticals. 

"The CDMO segment is already well-established in India, but this development will serve as a major catalyst for the industry, accelerating overall growth," stated a spokesperson from a prominent contract manufacturer. 

Currently, China holds an 8% share of the global CDMO market, while India accounts for 2.7%. Experts believe that the implementation of the Act represents a significant opportunity for the Indian pharmaceutical industry to capture a larger portion of this market from China. Reports indicate that Indian companies are already experiencing heightened interest from US firms, with more than 60% of Indian pharmaceutical firms reporting an increase in inquiries for new business opportunities. 

However, some experts caution that the Biosecure Act may not necessarily guarantee immediate benefits for local players, as countries such as Ireland and Singapore pose formidable competition. Mohan Ramaswamy, co-founder and CEO of Rubix Data Sciences, pointed out that while approximately 120 drug projects in the US are currently in various stages of development and could be affected by past Chinese involvement, transitioning these complex collaborations will take time. The Act includes a grandfathering clause that allows existing contracts with China to continue until 2032, providing a preparation period but delaying immediate financial gains. 

Despite these challenges, Indian companies possess distinct advantages. Major CDMOs like Cipla and Syngene are noted for their cost-effectiveness and skilled workforce. Moreover, the Indian government has been proactive in supporting the sector through grants and loans aimed at boosting infrastructure and capabilities. 

Ramaswamy emphasised that while the Biosecure Act has the potential to significantly impact the Indian CDMO space, it will require substantial investments in infrastructure and talent to effectively manage the influx of projects. He believes that with strategic planning and meticulous execution, India can leverage this opportunity to emerge as a major player in the global pharmaceutical arena. 

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