By Sonia Boolchandani
Over the past few months, global markets have been influenced significantly by the U.S. presidential election. The mantra, “When America sneezes, the world catches the cold,” rings true, as the policies of a new administration ripple across global economies. One sector poised to benefit from these shifts is India’s pharmaceutical industry, specifically the Contract Development and Manufacturing Organization (CDMO) segment.
With the U.S. increasingly adopting an anti-China stance under President Trump, the potential for India to gain traction in the pharmaceutical sector, especially CDMO services, has grown. While the world speculated on what the election results would mean for various industries, it’s clear that India stands to benefit, particularly in the pharmaceutical manufacturing space.
Why India Could Win Big in the CDMO Space
The U.S. Biosecure Act, a proposed piece of legislation designed to curb reliance on Chinese pharmaceutical and biotech suppliers, has been at the center of these discussions. The Act aims to bar federal contracts with five major Chinese life sciences companies—WuXi AppTec, WuXi Biologics, BGI Group, MGI, and Complete Genomics—citing national security risks tied to China’s involvement in the global pharmaceutical supply chain.
Legislation like the Biosecure Act typically makes its way through the U.S. Congress by passing in both the House of signed into law by the President. This act cleared a major hurdle when Representatives and the Senate before being it garnered overwhelming bipartisan support in the House in September. However, its path to becoming law faced complications when it was excluded from the 2025 National Defense Authorization Act (NDAA), widely seen as its best vehicle for passage.
Despite this setback, the Act remains a critical piece of legislation in ongoing efforts to restructure global pharmaceutical supply chains. If it fails to advance this year, it may face further delays or opposition as new lawmakers take office and priorities shift. For countries like India, however, the broader trend of reducing reliance on China presents a unique opportunity to step in and capture a larger share of the global pharmaceutical and CDMO markets.
India’s pharmaceutical industry, recognized globally for its generics manufacturing capacity, is stepping up to fill the void left by Chinese manufacturers. India already has a robust infrastructure for drug development, coupled with a large pool of skilled labor and lower manufacturing costs. This makes it an attractive outsourcing destination for global pharmaceutical companies looking to diversify their supply chains.
Indian Contract Research and Drug Manufacturing Organizations (CRDMOs) are set to capture a considerable amount of this outsourced work. McKinsey’s survey highlights that 20 to 40 percent of new business for Indian CRDMOs could stem directly from the effects of this geopolitical shift. The biosecurity concerns pushing the U.S. to diversify its supply chains are expected to create new opportunities for Indian firms, particularly those that can provide high-quality, reliable alternatives to Chinese suppliers.
What Are CDMO Companies?
CDMOs provide end-to-end services in drug development, including discovery, formulation, and large-scale commercial manufacturing. Their services span the entire lifecycle of a pharmaceutical product, from research and development (R&D) to commercial production. Outsourcing to CDMOs allows pharmaceutical companies to reduce costs, mitigate risks, and focus on their core competencies.
India’s position in the global pharmaceutical supply chain is strong due to its well-established generics industry and its growing capabilities in biotech and biologics. The country’s CDMO market, valued at ₹18,800 crore in 2024, is expected to expand to ₹37,200 crore by 2029, growing at a compound annual growth rate (CAGR) of 14.7%.
The Impact of the US Biosecure Act on Global Pharma Manufacturing
The US Biosecure Act has significant implications for the global pharmaceutical supply chain. By restricting Chinese companies from accessing US government funding, the legislation creates an opportunity for other countries, particularly India, to take on a larger role in manufacturing and supplying critical drugs.
India’s existing expertise in biologics, generics, and active pharmaceutical ingredients (APIs) aligns with global trends in biotechnology and drug manufacturing. The country is already home to 2,000+ USFDA-approved manufacturing plants, which is a critical differentiator when it comes to gaining the confidence of global pharmaceutical companies.
India’s CDMO market is expected to grow at a CAGR of 14.7%, reaching ₹37,200 crore by 2029. The global CDMO market, valued at $224.6 billion in 2023, is projected to expand at a CAGR of 6-7%, further highlighting the growth potential for Indian companies.
The China-Plus-One Strategy: India’s Competitive Advantage
The China-Plus-One strategy, which encourages companies to reduce their dependence on China by diversifying their supply chains, is gaining momentum. With concerns over the reliability of Chinese manufacturing, India is emerging as a preferred alternative for global pharmaceutical companies.
India’s competitive advantages include its low-cost manufacturing, skilled workforce, and growing focus on automation and digitization. The country’s pharmaceutical manufacturing capabilities are not only cost-effective but also maintain high standards of quality. India’s government has also been proactive in supporting the pharma sector, offering incentives such as the Production Linked Incentive (PLI) Scheme and National Policy on Pharmaceuticals to boost domestic manufacturing.
The Growing Investment in India’s CDMO Sector
India’s pharmaceutical sector is attracting substantial investment, both from domestic companies and international private equity (PE) firms. In 2024, global biotech funding surged to $20 billion in Q1 alone, up from $12 billion per quarter in 2023. This increase in funding is expected to benefit Indian CDMOs, as more global pharmaceutical companies look to outsource drug development and manufacturing.
Several Indian companies are investing heavily to expand their CDMO capabilities. For example:
- Aurigene Pharmaceutical Services, a subsidiary of Dr. Reddy’s Laboratories, is developing a new biologics facility in Hyderabad to manufacture therapeutic proteins and antibodies.
- Aragen Life Sciences is investing ₹2,000 crore in a new facility for drug discovery, development, and manufacturing services for global clients.
- Laurus Labs is expanding its production capacity for APIs, with a ₹7,990 crore investment to meet the growing demand for biologics.
- Divi’s Laboratories and Jubilant Pharmova are also ramping up their manufacturing capabilities to capture more market share.
These investments indicate the growing confidence in India’s pharmaceutical sector and its potential to become a leading player in the global CDMO market.
The India-China Dynamic: Why India Is the Preferred Alternative
India’s pharmaceutical industry holds a significant edge over China, particularly in the post-pandemic world. The Chinese pharmaceutical industry has faced increasing scrutiny from the US and Europe due to concerns over quality control, intellectual property theft, and transparency. In contrast, India’s pharmaceutical industry has long been recognized for its commitment to quality manufacturing, with multiple Indian companies boasting USFDA-approved plants.
India’s pharmaceutical industry is also more diversified compared to China’s, with a strong foothold in generics, biotech, and biosimilars. Additionally, India’s large talent pool, combined with an English-speaking workforce, makes it an attractive destination for multinational companies seeking reliable outsourcing partners.
The Role of Private Equity in India’s CDMO Growth
Private equity investments are accelerating the growth of India’s pharmaceutical industry, particularly in the CDMO space. Several high-profile transactions in recent years highlight the growing interest in Indian CDMOs:
- Aragen Life Sciences was valued at $1 billion after a 33% stake was sold to Goldman Sachs.
- Piramal Pharma sold a 20% stake to Carlyle for ₹3,700 crore in 2023.
- Suven Pharmaceuticals was acquired by Advent International for ₹9,500 crore in 2022.
These investments are helping Indian CDMOs scale up their operations, expand their global footprint, and enhance their technological capabilities.
CDMO: India’s Pharmaceutical Future?
India’s pharmaceutical industry stands at a pivotal moment, with the opportunity to play a crucial role in the global CDMO market. The US Biosecure Act and the ongoing diversification of global supply chains are creating an opening for India to capture a significant share of pharmaceutical outsourcing. The country’s cost-effectiveness, skilled workforce, established infrastructure, and growing capabilities in biologics put it in a strong position to capitalize on this opportunity.
As the global pharmaceutical landscape continues to evolve, India’s role as a leader in Contract Development and Manufacturing Organizations will only grow.
Disclaimer
Note: We have relied on data from http://www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
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About the Author
Sonia Boolchandani is a seasoned financial content writer with over four years of experience in delivering clear, engaging, and insightful content on various financial topics. She has contributed her expertise to prominent firms, including 5Paisa, Vested Finance, and Finology, where she has crafted content that simplifies complex financial concepts for diverse audiences. Sonia’s background enables her to navigate a wide array of subjects, from stock market insights to investment strategies, making her a trusted source for financial knowledge. Her work is driven by a passion for helping readers understand and make informed decisions in the financial world, bridging the gap between industry intricacies and reader-friendly explanations.
Disclosure: The writer or its dependents do not hold assets discussed in this article. Please do your own research before investing.
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