India’s CRDMOs poised for growth with passage of BIOSECURE Act in the offing

A diluted form of the BIOSECURE Act, prohibiting executive agencies from procuring biotechnology equipment or services from Chinese companies “of concern” with ties to China’s military, is on the verge of becoming U.S. law. The House of Representatives recently passed the National Defense Authorization Act for Fiscal Year 2026 that includes a watered-down version of the BIOSECURE Act, with the Senate expected to vote soon.

While a more robust version of the bill was passed in 2024 by the House, naming Chinese companies WuXi AppTec and WuXi Biologics, it failed to be included in last year’s military spending package. However, this time around success appears in sight with an important caveat — the latest version of the legislation doesn’t name those two firms.

Despite the dilution of the bill’s provisions, Macquarie Capital expects it will be enacted by end of this year and will accelerate growth for India-based contract research, development, and manufacturing organizations (CRDMOs), driving a “high-ten” compound annual growth rate (CAGR) for Indian companies in the space over the next five years.

A report in August from India Ratings and Research (Ind-Ra) forecasted that Indian 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.

“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.”

Jefferies analysts in a report also in August found that India’s CRDMOs are at an “inflection point” and positioned to take advantage of a “firehose” of opportunities, fueled by a China+1 strategy adopted by large biopharma companies.

The analysts pointed out that Big Pharma historically has relied on India for sourcing intermediates, while the final steps of active pharmaceutical ingredient (API) manufacturing have typically been carried out at overseas sites. However, they contend that situation is changing.

“We believe the most immediate opportunity for Indian CRDMO firms lies in GLP-1/GIP/Amylin intermediate manufacturing, which could gradually evolve into full API production,” according to the report. “Historically, U.S. pharma companies relied heavily on Chinese CRDMOs like WuXi, but geopolitical tensions have prompted a shift toward alternative markets.”

The biggest beneficiary among India’s CRDMOs appears to be Sai Life Sciences, which the report said is witnessing unprecedented demand from Big Pharma clients to diversify away from China.

Sai Life Sciences vs. Syngene

Jefferies analysts noted that Sai Life Sciences and Syngene International are among the few “pure play” Indian CRDMOs. However, the analysts called out Sai Life Sciences as their top pick in the sector. “Sai’s strong east-west presence, integrated services, high growth visibility and potential earnings upgrades make it the best CRDMO bet,” they wrote.

Siva Chittor, CFO of Sai Life Sciences, told Pharma Manufacturing in late October at the CPHI Frankfurt conference that his company has been seeing a “tailwind” from the BIOSECURE Act — at least in the legislation’s earlier draft forms.

“The first wave was right after Covid when we saw a lot of customers come to us for a non-Chinese source for commercial intermediates, APIs and things like that,” Chittor said. “On the CMC [Chemistry, Manufacturing, and Controls] side, we’ve seen a lot of development work that would have gone to China in previous years.” He noted that Sai Life Sciences currently works with 18 of the 25 largest biopharma companies by revenue.

Jefferies analysts contend that the China+1 opportunity for India’s CRDMOs “lies in the small molecule space with readily available talent and historical track record in the domain.” Within the small molecule segment, they believe Sai Life Sciences is well-positioned with strong integrated offerings across the CRDMO value chain, while Syngene appears to lack meaningful late-stage small molecule assets and is focused on early-phase intermediates.

“Sai boasts of strong development capability with presence of scientists in Manchester (UK) as well as Hyderabad (India),” according to the Jefferies report. “Recently, Sai has bagged four Big Pharma development contracts and is registering strong demand for development capabilities by Big Pharma. In our view, Sai’s process chemistry strength makes it a top candidate among Indian players for late-stage opportunities.”

Although most of the major Indian CRDMO players have capabilities focused solely on small molecule development and manufacturing, the Jefferies analysts pointed out that Syngene is the only notable exception that has meaningful biologics capabilities.

Their report noted that Syngene has recently acquired two facilities — including a Baltimore site from Emergent BioSolutions — which added approximately 35KL in biologics manufacturing capacity. However, Syngene’s new capacities could take a couple of years to break even and will be a “margin drag” for the company, according to Jefferies.

In March, Syngene announced it paid $36.5 million to Emergent Manufacturing Operations Baltimore — a subsidiary of Emergent BioSolutions — to buy its first biologics site in the U.S.

Alex Del Priore, Syngene’s senior vice president for development and manufacturing services, told Pharma Manufacturing at the CPHI Frankfurt conference in October that the company has been preparing for the “restart” of the facility.

“The investment thesis was we need to make where we sell our products and services — and the largest market is the U.S.,” Del Priore said. Regardless of the BIOSECURE Act or potential tariffs, he added “it’s important to diversify and we offer risk reduction” with a global network.

However, Jefferies analysts view Syngene’s small molecule pipeline as weak — with underutilization at its API plant in Mangalore, India — and no meaningful commercial launches, with recent biologics capacity additions taking years to break even due to low contract visibility.

“Syngene had invested ~USD70m for its Mangalore API plant and was U.S. FDA certified by Jul-23, however no meaningful product has come out of it and capacity utilization remains below 50%,” the report found.

Growth projections

Sai Life Sciences and Syngene have both guided for growth in their respective contract research organization (CRO) businesses, according to Jefferies analysts. However, they believe Big Pharma-driven growth has higher likelihood to deliver results — a key differentiator between the two Indian companies.

Projected growth for Sai Life Sciences will be uniform across CRO and contract development and manufacturing organization (CDMO) but will be led by Big Pharma projects, while commercialization of pipeline drugs will “fuel the midterm journey,” according to the analysts, with plans to have 30% more capacity operational by mid-FY27 when the development projects transition to manufacturing.

“Sai’s capacity utilization reached 74% in 4QFY25, and total capacity has now reached 675KL (as of Jun-25),” the report found. “The company plans to add 450KL capacity over 2 blocks, with one set to begin commercial production by mid-FY27.”

Although Sai Life Sciences has strong momentum in its CDMO business, with several development-stage projects expected to go commercial within 12-18 months, Syngene’s CDMO division is heavily reliant on a single product with limited new wins “making future growth uncertain,” according to Jefferies.

Sai Life Sciences “had no Big Pharma exposure in FY20 which has now increased to 37% as of FY25 (~USD28m sales),” while Syngene’s “Big Pharma exposure in CRO is via their dedicated centers which has grown at just ~7% CAGR (FY20-25),” the analysts said.

At the same time, their report noted that biotechnology funding challenges are the “fly in the ointment” for India’s CRDMO industry. The analysts warned that Sai Life Sciences and Syngene have high dependence on biotechnology firms for their 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, adding that Sai’s CRO business has demonstrated remarkable growth while Syngene could face the slowest sales CAGR due to near-term challenges of destocking and biotech funding issues.

Their analysis also suggests that Syngene lacks major blockbuster molecules in its small molecule pipeline. However, Sai Life Sciences has five key pipeline drugs, three of which are commercial and two in late-stage development, according to Jefferies analysts.

“Sai is expected to manufacture APIs for three of these, providing meaningful value addition,” the analysts concluded. “These drugs currently generate $800 million in sales, with projections (Bloomberg consensus) reaching $4.3 billion by 2030.”