Jefferies upbeat on India CRDMO; initiates Buy on Cohance; upgrades Divi's

Jefferies is optimistic on India's CRDMO sector, given its evolution from quasi-chemical firms into strategic partners for innovators; check more details

Global brokerage Jefferies describes India’s contract research, development, and manufacturing organisation (CRDMO) sector as a “firehose of opportunities,” evolving from quasi-chemical firms into strategic partners for innovators, supported by strong capabilities and geographic diversification.

 

Jefferies has initiated coverage on Cohance Lifesciences (formerly Suven Pharmaceuticals) with a ‘Buy’ rating and a price target of ₹1,150 per share. It has upgraded Divi’s Laboratories to ‘Buy’, raising the target to ₹7,150 per share from ₹6,750, while maintaining a ‘Buy’ on Piramal Pharma with a target of ₹260. Syngene International and Gland Pharma are rated ‘Hold’, and Laurus Labs ‘Underperform’, with targets of ₹720, ₹590, and ₹1,970, respectively.

 

 

At 11:19 AM, Divi’s Laboratories was up 1.21 per cent, Cohance Lifesciences rose 2.01 per cent, Laurus Labs gained 0.47 per cent, Piramal Pharma increased 0.57 per cent, Syngene International was up 0.72 per cent, and Gland Pharma was flat with a slight negative bias.  READ LATEST STOCK MARKET UPDATES TODAY LIVE

Why is Jefferies bullish on India’s CRDMO?

Evolution of CRDMO

Jefferies notes that India’s CRDMO industry has transformed from being primarily recognised as contract research and manufacturing services (CRAMS) and a sidekick in the pharma sector to becoming a global focal point. The Indian CRDMO sector is now attracting investor interest comparable to its international peers, with the industry’s market capitalisation estimated at $40-50 billion.

Expanding pipeline

The CRDMO pipeline is rapidly evolving, driven by big pharma projects. Jefferies’ analysis highlights Divi’s Labs has a key blockbuster Glucagon-like peptide-1 (GLP-1) pipeline contracts—a natural hormone involved in blood sugar regulation, appetite control, and weight management.

 

Cohance Lifesciences boasts an antibody-drug conjugate (ADC)-led pipeline, while Piramal and Sai Life Sciences have several drug candidates in advanced clinical trial phases.

 

In the weight-loss and type 2 diabetes space, the real opportunity lies in newer drugs like Tirzepatide and Orforglipron, which utilise synthetic processes or belong to the small-molecule class. Jefferies estimates the relevant intermediate market for these drugs will be worth $1.2 billion by 2030, providing sustained pipeline momentum for India’s CRDMO sector.

High-teens revenue CAGR projected

India’s CRDMO sector, currently a $3 billion revenue industry, has experienced a 14 per cent compound annual growth rate (CAGR) over the past five years. This is expected to accelerate to an 18 per cent CAGR during FY25–30, supported by strong pipeline visibility, big pharma diversification (China+1), and growth in weight-loss and type 2 diabetes drugs (GLP/GIP etc).

China+1 presents a $700 million annual sales opportunity

Historically, US pharma companies relied heavily on Chinese CRDMOs like Wuxi, but geopolitical tensions have prompted a shift toward alternative markets. Jefferies believes India’s CRDMO sector, with its strong small-molecule capabilities and proven track record, is well-positioned to capitalise on the shift away from China.

 

The brokerage estimates the China+1 opportunity for Indian firms at $700 million per year in the base case, potentially rising to $1.4 billion in a bull case. This represents a structural shift expected to continue for more than a decade. The key risk remains the increase in licensing deals by big pharma with China, which could sustain dependence on Chinese CRDMOs.