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Indian Drug Manufacturers Benefit from Western Interest Amid Tensions with China

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Drug manufacturers are increasingly looking to reduce their reliance on Chinese contractors for the production of drugs used in clinical trials and early-stage manufacturing. This shift has led to a surge in interest in Indian manufacturers, according to industry executives and experts.

China has long been a popular destination for pharmaceutical research and manufacturing services due to its low cost and efficiency. However, rising tensions with China and the need to “de-risk” supply chains have prompted many companies to explore alternatives.

Some biotech companies are now considering using manufacturers in India to produce active pharmaceutical ingredients (API) for clinical trials and outsourced work.

Western governments are recommending India as a second source, alongside China, for manufacturing. Several major Indian contract development and manufacturing organizations (CDMOs), including Syngene, Aragen Life Sciences, Piramal Pharma Solutions, and Sai Life Sciences, have reported increased interest from Western pharma companies.

Top executives at these companies have seen some customers seeking to leave China and establish supply chains in India.

While the full benefits for Indian manufacturers may take time to materialize, the interest is expected to translate into lucrative contracts for outsourcing firms in the future.

Chinese CDMOs have expertise in biologic drugs, which require a higher level of regulatory approval, making it a complex process to switch to a new firm. However, India is looking to strengthen its position in the pharma services sector to boost sales and enhance its reputation in the $42 billion pharmaceutical industry. 

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Credit: DepositPhotos

There are concerns regarding oversight and quality standards in the Indian CDMO industry. Indian manufacturers are urged to ensure their reputation matches that of Western and Chinese counterparts.

In February, the U.S. FDA warned against using an eye drop made in India that was linked to a drug-resistant bacteria outbreak in the United States. Despite this, Indian CDMOs state that their facilities are routinely inspected by the FDA.

The revenue from India’s CDMO industry is estimated to reach $15.6 billion this year, compared to $27.1 billion in China. However, India’s industry is projected to grow at a rate of more than 11% annually over the next five years, outpacing China’s estimated growth rate of 9.6%.

Some Indian companies are already making strides in meeting the increased demand. Piramal Pharma has received requests for “backward integration to India,” where even the most basic raw materials are sourced from the country instead of China.

Sai Life Sciences has nearly doubled its manufacturing capacity since 2019 and plans to add another 25% in the coming year.

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This shift is particularly noticeable in drug discovery work for conventional pharmaceuticals. New biotech firms are choosing to have a presence in both India and China right from the start. This diversification strategy reflects the growing interest in Indian manufacturers and the desire to reduce dependence on China’s supply chains.

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