India’s CRDMOs are well-positioned for a ‘firehose’ of opportunities: analysts
Fueled by a China+1 strategy adopted by pharmaceutical companies, India’s contract research, development and manufacturing organizations (CRDMOs) are at an inflection point and positioned to take advantage of a “firehose” of opportunities, finds a new report from Jefferies analysts.
“Historically, U.S. pharma companies relied heavily on Chinese CRDMOs like WuXi, but geopolitical tensions have prompted a shift toward alternative markets,” the analysts wrote. “We believe Indian CRDMOs, with their strong small-molecule capabilities and established track record in the segment, are well-positioned to capture this opportunity.”
Jefferies analysts estimate that China+1 represents an annual $700 million sales opportunity for India’s CRDMO industry as a base case, with the potential of reaching $1.4 billion in a “bull” scenario. Overall, they said the Indian CRDMO market is currently generating $3 billion in sales and is expected to grow to approximately $7 billion by fiscal year 2030.
“In our view, this is a structural shift which will continue for more than a decade,” according to the analysts, who expect an 18% compound annual growth rate (CAGR) for fiscal years 2025 through 2030. The analysts view Divi’s Laboratories and Sai Life Sciences as the “key winners” of the opportunity but believe Sai’s “strong east-west presence, integrated services, high growth visibility and potential earnings upgrades make it the best CRDMO bet.”
At the same time, the analysts predict Cohance Lifesciences is poised to achieve the highest growth rate among the Indian CRDMOs it covers, delivering over 25% adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) CAGR from fiscal years 2025 through 2028.
Last week, a report from India Ratings and Research (Ind-Ra) similarly concluded that India’s CRDMOs are well-positioned to capitalize on rising demand for their services, as the biopharma industry shifts its supply chains and outsourcing away from China.
GLP-1s and ADCs
When it comes to the weight loss and type 2 diabetes drug market, the analysts contend that as the market shifts from semaglutide to next-generation drugs such as tirzepatide and orforglipron — which use synthetic processes or belong to the small-molecule class — Indian CRDMOs stand to benefit significantly, especially in intermediates manufacturing.
The analysts estimate the non-semaglutide intermediate market could be worth $1.2 billion by 2030 and $1.9 billion by 2034, with Divi’s Laboratories and Piramal Pharma as the biggest potential beneficiaries of the weight loss and type 2 diabetes market among Indian CRDMOs. Divi’s Laboratories, India’s largest CRDMO, has “moved from being viewed as a chemicals manufacturer to a global play on pharma innovation,” according to the report.
In the hot antibody-drug conjugate (ADC) space, the analysts see the CRDMO market — currently valued at $1.4 billion — being driven by early-stage clinical work which is projected to grow at a 23% CAGR for an approximate $4 billion opportunity by 2029.
Globally, the analysts said there are only four “truly integrated” ADC CRDMO players — across discovery, development, and manufacturing — and two of them are from India: Cohance and Piramal Pharma.
“Their presence highlights India’s growing strategic importance in the global ADC development landscape,” wrote the analysts, who noted that monomethyl auristatin E (MMAE) is the most commonly used payload backbone present in 48% of the ADC pipeline, “enabling Cohance to address ~70% of the payload manufacturing needs in the market.”
In December 2024, Cohance acquired NJ Bio, a CRDMO specializing in ADC/XDC development with R&D capabilities across payloads, linkers, and bioconjugation, with an 80,000-square-foot lab and manufacturing facility in Princeton, New Jersey. “This acquisition significantly enhances Cohance’s position as an integrated ADC/XDC player,” the analysts said.
Piramal Pharma is engaged with three Big Pharma clients on various ADC projects and is also executing commercial projects through its bioconjugation platform, according to the report. The company’s key offering in the ADC space is its bioconjugation facility located in Grangemouth, UK, which operates five suites — four of which are in use with land available to add four more suites, if needed, the analysts said.
Growing pipelines, biotech vulnerabilities
Jefferies’ analysis suggests that most Indian CRDMOs have “robust pipeline drugs” whose contract execution will begin in the next two years. Based on their analysis, they project that the industry-wide 15% to 20% revenue CAGR appears “not only achievable but potentially conservative, especially if the current pipeline momentum continues.”
Their analysis reveals a “healthy molecules buildup” for Cohance, Divi’s Laboratories, Piramal Pharma, and Sai Life Sciences. At the same time, the report noted that biotechnology funding challenges are the “fly in the ointment” for India’s CRDMO industry.
The analysts warned that Indian CRDMOs such as Sai Life Sciences and Syngene have high dependence on biotechnology firms for their contract research organization (CRO) divisions with biotech accounting for 40% to 60% of CRO sales.
“We think, Syngene, with ~60% CRO sales, remains vulnerable to biotech performance, while Sai Life has diversified through its Boston facility and Big Pharma projects,” the analysts said.
A decade ago, India’s CRDMOs were considered a “quasi-chemicals” industry, the report concluded. However, they have evolved to become “strategic partners” for global pharma innovators “backed by capabilities and geographic diversification.”