Indian CDMOs could account for up to 10% of global outsourced work by 2033

The survey states that the industry is about to witness a redistribution of outsourcing work across several Asian countries, with India and Korea emerging as new powerhouses by 2033

India could potentially account for 8 to 10 per cent of work outsourced to Contract Drug Manufacturing Organisations (CDMOs) globally by 2033, according to a survey by McKinsey and Company.

CDMOs serve major pharmaceutical companies on a contract basis to provide services from drug development to drug manufacturing, allowing them to outsource those aspects of the business.

The survey, conducted with 20 global CDMOs, states that the industry is about to witness a redistribution of outsourcing work across several Asian countries, with India and Korea emerging as new powerhouses by 2033.

“This growth will be largely driven by the evolving geopolitical environment, such as the passing of the US Biosecure Act, with most Indian Contract Research and Drug Manufacturing Organisations (CRDMOs) expecting 20 to 40 per cent of their new business to stem from these changes,” the survey stated.

 

The US Biosecure Act seeks to prohibit federal agencies from contracting with or providing funding to any company working with a ‘biotechnology company of concern’, and will extend to companies that source or utilise equipment or services from these listed companies. These mostly include Chinese companies.

It has been passed by the United States House of Representatives and is awaiting Senate confirmation.

Terming the evolving geopolitical landscape and impending legislation a transformative opportunity for the Indian CDMO industry, Dr Prem Pavoor, senior partner and head of India and India Healthcare Investments at Eight Roads Ventures, said that we are already seeing leading Indian biopharmaceutical companies receive more request-for-proposals (RFPs), especially from US customers.

“Though these customers may be adopting a wait-and-watch approach for now, it’s clear that amidst global uncertainties, they will seek to diversify their outsourcing footprint,” he added.

The survey also stated that global pharmaceutical companies are now increasingly considering India as a destination for their outsourcing needs.

Commenting on the insights from the survey, Anirudh Roy Popli, Partner at McKinsey and Company, said that the biopharma industry is increasingly recognising the value Indian CDMOs bring to the table, as we are seeing increased interest levels across customer segments.

“However, building trust and long-term, at-scale partnerships takes time. With a strong focus on value and innovation, Indian CDMOs are well-positioned to play a pivotal role in shaping the future of healthcare,” he added.