The share prices of Indian pharmaceutical companies involved in the CRDMO (Contract Research, Development and Manufacturing) space were up to 5 per cent on Friday with the US senate passing the National Defense Authorisation (NDAA) bill (with an amended version of the Biosecure bill embedded in it).
The celebration on the bourses was triggered by the long-awaited belief and hope that with the Biosecure Act in place, the US will now limit its dependence on Chinese CRDMO players and the US companies left with little option other than look to players outside of China.
Although the share of India in the global CRDMO space is just around 4 per cent, several Indian companies have made a mark with some recognised globally. These include Divi’s Laboratories, Syngene, Laurus Labs, Piramal Pharma, Aurigene Pharmaceutical Services (a wholly owned subsidiary of Dr Reddy’s), Wockhardt and a few others. While the bourses seem upbeat on the potential upside for the many Indian companies in this space, the mood in the sector was largely in favour of staying in a wait and watch mode.
As one promoter of a leading company, not wanting to be named, observed, “sure, we can now expect to see more enquiries being made by the US companies keen to collaborate but till there is a clarity on the duties for chemical intermediates and for patented medicines, it may be a bit early to celebrate.” Also, even if it were all to be favourable for India, the gains were unlikely to be felt overnight as typically the process from contact and initial dialogue to final delivery of products and services takes close to two years.
But then, despite the uncertainty on the duties or the time it could take for business to materialise, the tempered optimism across the board at the moment, stems from the fact that purely from an Indian perspective, this could be seen as a positive development because the big pharma (leading innovator companies) in the US would now be forced to re-evaluate their dependence on Chinese companies for outsourcing their research and development work. Given that India is today just about 4 per cent of the global CRDMO market and China three times this, if not more, even a marginal shift in business to India could mean a huge upside in opportunities opening up for Indian companies – arguably a good reason for the excitement on the bourses.