By Maggie Fick, Andrew Silver and Rishika Sadam
LONDON/SHANGHAI/HYDERABAD (Reuters) – Amid increasing tensions with China, pharmaceutical companies are reassessing their reliance on Chinese contractors for the production of drugs used in clinical trials and early-stage manufacturing. This shift has led to a surge in demand for alternatives in India, as revealed in interviews with 10 industry executives and experts.
For nearly two decades, China has been the go-to destination for pharmaceutical research and manufacturing services, thanks to competitive costs and rapid production offered by contract drugmakers in the region. However, geopolitical tensions and concerns over supply chains have prompted Western companies to explore other options, thus benefiting the pharmaceutical industry in India.
In light of these developments, some biotech firms are considering Indian manufacturers for the production of active pharmaceutical ingredients (API) for clinical trials and other outsourced work. According to Gerald Greiner, co-head of global healthcare investment banking at Jefferies, companies are beginning to opt for alternative manufacturing sources, veering away from China.
Dr. Ashish Nimgaonkar, founder of Glyscend Therapeutics, echoed this sentiment, stating that China has become a less attractive option for their operations. As a result, Indian contract development and manufacturing organisations (CDMOs) are increasingly being preferred over Chinese counterparts for the production of medicines in trials.
India’s leading CDMOs such as Syngene, Aragen Life Sciences, Piramal Pharma Solutions, and Sai Life Sciences have reported a surge in interest and requests from Western pharma companies, including major multinationals. This trend is expected to contribute to strong profit growth for these Indian manufacturers in the near future.
Furthermore, China’s established expertise in biologic drug manufacturing could slow the immediate benefits for Indian manufacturers. Peter DeYoung, CEO of Piramal Pharma Solutions, noted that this transition would likely take time as treatments in early development eventually reach the market, creating more lucrative opportunities for outsourcing firms.
While India is poised to gain prominence in the pharma services sector, concerns about quality standards persist. Recent warnings from the U.S. Food and Drug Administration (FDA) against certain Indian-made products have raised questions about oversight and quality control. Nevertheless, Indian CDMOs are doubling down on efforts to match Western and Chinese standards, aiming for a larger share of the global pharmaceutical manufacturing market.
It is clear that the dynamics in pharmaceutical manufacturing are shifting, with India emerging as a favorable alternative to China. As this trend continues, both the Indian and Chinese pharmaceutical markets are set for significant changes, driving growth and reshaping global supply chains.
(Reporting by Maggie Fick in London, Andrew Silver in Shanghai and Rishika Sadam in Hyderabad; Editing by Michele Gershberg and Catherine Evans)
