Editor’s (re)View: Watch out China, India’s CRDMOs have you in their crosshairs

If you haven’t been paying attention lately to Wall Street analysts and credit agencies, you’d be forgiven for not knowing that a global supply chain shakeup is in the offing and India’s contract research, development and manufacturing organizations (CRDMOs) are the potential beneficiaries.

At the heart of this transformation: a China+1 strategy in which companies look to diversify their supply chains and manufacturing operations beyond China by focusing on at least one additional country — in this case India.

This week, a new report from Jefferies analysts found that India’s CRDMOs are “at an inflection point” and well-positioned to take advantage of a “firehose” of opportunities fueled by a China+1 strategy adopted by global biopharmaceutical companies.

“Our pipeline analysis suggests that most Indian CRDMOs have robust pipeline drugs whose contract execution will begin in the next 2 years,” Jefferies analysts wrote in their report. “We believe new contracts towards Indian CRDMOs will be driven by Big Pharma’s diversification strategy and the surge in weight loss and type 2 diabetes (T2D) drugs.”   

Last week, India Ratings and Research (Ind-Ra) — a subsidiary of the Fitch Group — similarly concluded that the reorientation of supply chains is resulting in faster ramp-up of capacity utilization with Indian CRDMOs benefiting from increased outsourcing initiatives by global biopharma companies.

“The China+1 strategy adopted by global pharmaceutical and biotech companies is accelerating the shift away from China-centric sourcing,” according to Ind-Ra. “India is emerging as a preferred alternative, thanks to its strong regulatory compliance, cost-effective operations, and scalable infrastructure.”

Big money is at stake as India continues to emerge as a global pharma innovation hub and take business away from China. Jefferies analysts estimate China’s CRDMO market at $18.7 billion, with approximately 78% of the revenue coming from small-molecule services, which they see as the most relevant segment for Indian CRDMOs.

A February 2025 report from the Boston Consulting Group and a new consortium of 11 Indian CRDMOs found that the sector stands to benefit from this outsourcing trend and recent geopolitical dynamics, with the potential to grow from an industry currently valued at $3 billion to $3.5 billion — an approximate 2% to 3% share of the $140 billion to $145 billion global CRDMO market — to between $22 billion to $25 billion by 2035. 

Jefferies analysts contend that there is a structural shift occurring which will continue for more than a decade. The firm, which forecasts an 18% compound annual growth rate (CAGR) for fiscal years 2025 through 2030, estimates that China+1 represents an annual $700 million sales opportunity for India’s CRDMOs as a base case, with the potential of reaching $1.4 billion in a bull scenario.

However, the analysts warned that the main risk factor for Indian CRDMOs is the rising in-licensing deals by Big Pharma with China, which has resulted in continued dependence on Chinese CRDMOs.

“The growing pace of innovation in China, along with increased licensing activity by global pharmaceutical companies, presents a potential challenge to the China+1 strategy that has supported the rise of Indian CRDMOs,” according to Jefferies. “As Chinese innovation continues to accelerate and attract global partnerships, this dynamic could increasingly limit the opportunities available to Indian players under the China+1 framework.”