India’s CRDMO industry to double to US$14 bn by 2028

India’s CRDMO industry is poised for significant growth, with its market size expected to double from US$ 7 billion to US$ 14 billion by 2028, driven by a 14% CAGR, reveals a report by Macquarie Equity Research. Increasing pharmaceutical outsourcing, regulatory support, and global supply chain shifts favor India’s position as a cost-effective manufacturing hub. The US Biosecure Act could further push the market to US$ 22 billion by 2030.  

India’s Contract Research, Development, and Manufacturing Organization (CRDMO) industry is on a robust growth trajectory, with its market size projected to double from approximately US$ 7 billion to US$ 14 billion by 2028, according to a report by Macquarie Equity Research. This surge reflects the increasing shift toward outsourcing in drug development and manufacturing. 

The sector is expected to grow at a 14% compound annual growth rate (CAGR), driven by increasing pharmaceutical outsourcing, regulatory support, and global supply chain restructuring. CRDMOs provide comprehensive drug development and manufacturing services to pharmaceutical and biotechnology companies, and are playing a crucial role in this expansion.

Key highlights of Macquarie Equity Research report

The report highlights that India’s CRDMO industry is at a pivotal moment, benefiting from factors such as drug pricing pressures and geopolitical shifts. As global pharmaceutical companies seek cost-effective and reliable manufacturing partners, India is emerging as a preferred destination for small-molecule drug development and production.

Additionally, regulatory initiatives like the US Biosecure Act could accelerate the industry’s growth to a ‘high-teens’ CAGR, potentially pushing its market size to US$ 22 billion by 2030. These developments are reshaping global pharmaceutical supply chains, reducing dependence on China.

“We estimate implementation of the US Biosecure Act could divert around US$ 17 billion of opportunities from Chinese CDMO companies to other regions over the next 3-5 years. Assuming 25 per cent of this incremental business shifts to Indian CDMOs, it could add about $4 billion in the medium term, boosting the India CDMO market to ~$22 billion in the bull case scenario, compared to $18 billion in the base case scenario,” the report stated.

The broader Asia-Pacific pharmaceutical CDMO sector was valued at over US$ 50 billion in 2023, driven by cost-efficient manufacturing, increasing outsourcing trends, and geopolitical risks that are prompting companies to diversify supply chains. While China remains the dominant player, India is rapidly gaining preference due to its competitive advantages.

Indian CDMOs offer a 30-40% cost advantage compared to their Western counterparts, making them an attractive option for global pharmaceutical firms. The country also has a strong regulatory track record, with approvals from major agencies such as the USFDA and EMA. 

Furthermore, India’s expertise in Active Pharmaceutical Ingredients (APIs), Highly Potent APIs (HPAPIs), and specialty chemicals enhances its strategic position in the global pharmaceutical supply chain.

Ratings by Macquarie Equity Research

Macquarie Equity Research initiated outperform ratings for Divi’s Labs, Suven Pharma, Bluejet Healthcare, and Syngene. In its regional analysis of 11 Contract Development and Manufacturing Organisation (CDMO) companies, the brokerage favors Indian and Korean CDMOs, with Divi’s Labs and Samsung Bio emerging as its top picks.

The Macquarie report said, “We expect our covered CDMO companies, Divi’s Labs, Suven, Bluejet, and Syngene to outperform industry growth due to their superior scale, reliability and long-standing customer relationships.”

Divi’s Laboratories and Suven Pharma have been identified as leading product-led CDMOs in the Indian market, according to the report. They are advancing in key technologies such as antibody-drug conjugates (ADCs), peptides, and oligonucleotides. The report forecasts a significantly higher CAGR of 20-25% for these product-led CDMOs, compared to the ‘mid-teens’ growth expected for services-led firms like Syngene.

Conclusion

India’s CRDMO sector is set for sustained growth in the coming years, driven by a favorable regulatory environment, cost advantages, and rising global demand. Supportive geopolitical dynamics, ease of doing business, and strong intellectual property (IP) protection laws, further strengthen India’s position as a preferred partner for pharmaceutical R&D and manufacturing,