Indian drug manufacturers – According to interviews with ten industry executives and experts, drugmakers are attempting to reduce their reliance on Chinese contractors who produce drugs used in clinical trials and early-stage manufacturing, a move that benefits rivals in India.
Because of the low cost and speed offered by contract drugmakers in China, China has been the preferred location for a variety of pharmaceutical research and manufacturing services for nearly 20 years.
Despite the Trump administration’s trade war with China and the supply chain havoc experienced by other industries during the COVID-19 pandemic, that relationship has largely held firm. However, rising tensions with China have prompted more Western governments to advise businesses to “de-risk” supply chains from exposure to the Asian superpower.
As a result, some biotech companies are considering hiring Indian manufacturers to produce active pharmaceutical ingredients (API) for clinical trials or other outsourced work.
“Today, you’re probably not sending an RFP (request for proposal) to a Chinese company,” said Tommy Erdei, Jefferies’ global co-head of healthcare investment banking. “It’s as if they’re saying, ‘I don’t want to know, it doesn’t matter if they can do it cheaper, I’m not going to start putting my product into the market.’”
Indian drug manufacturers
Dr. Ashish Nimgaonkar, the founder of Glyscend Therapeutics, a biotech firm based in the United States that is testing treatments for type 2 diabetes and obesity in early trials, agreed. “All of the factors over the past several years have made China a less attractive option for us,” he added.
Nimgaonkar told Reuters that when Glyscend issues an RFP for the medicines it is currently testing, Indian contract development and manufacturing organizations (CDMOs) will be preferred over Chinese ones.
Syngene, Aragen Life Sciences, Piramal Pharma Solutions, and Sai Life Sciences, four of India’s largest CDMOs, told Reuters that this year has seen increased interest and requests from Western pharma companies, including major multinationals.
India is looking to expand its presence in the pharmaceutical services sector in order to boost sales and reputation in its $42 billion pharmaceutical industry.
However, concerns about lax oversight remain. According to Nimgaonkar, Indian CDMOs must do more to ensure their reputation for quality standards matches those of Western and Chinese counterparts.
In February, the US Food and Drug Administration (FDA) issued a warning against using an eye drop made in India that was linked to a drug-resistant bacteria outbreak in the US that resulted in one death.
Mordor Intelligence, an India-based research firm, estimates that revenue from India’s CDMO industry will be $15.6 billion this year, compared to $27.1 billion in China. However, it expects India’s industry to grow at a rate of more than 11% per year on average over the next five years, compared to 9.6% in China.
According to the Indian CDMOs, the FDA inspects their facilities on a regular basis. An FDA representative declined to comment.
According to Sai Life Sciences, it has nearly doubled manufacturing capacity since 2019 and plans to add another 25% in the next year or so to meet demand.
According to Ramesh Subramanian, chief commercial officer of Aragen, a privately held Indian company that has grown from 2,500 to 4,500 employees in the last five years, revenue growth of 21% last year was fueled in part by new contracts with Western biotech firms. Aragen has seven of the top ten pharmaceutical companies as clients, he said, declining to name them.