Indian drug manufacturers benefit from Big Pharma interest beyond China

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Drugmakers are looking to reduce their reliance on Chinese contractors who produce drugs used in clinical trials and early-stage manufacturing. This decision is benefiting competitors in India, according to interviews with 10 industry executives and experts.


For almost 20 years, China has been the preferred location for a range of pharmaceutical research and manufacturing services due to the low cost and speed offered by contract drugmakers. Despite a trade war between the US and China under the Trump administration and supply chain disruptions experienced by other industries during the COVID-19 pandemic, that relationship remained strong. However, increasing tensions with China have led more Western governments to recommend that companies “de-risk” supply chains from exposure to the Asian powerhouse.


This is leading some biotech firms to consider using manufacturers in India to produce active pharmaceutical ingredients (APIs) for clinical trials or other outsourced work. According to Tommy Erdei, global co-head of healthcare investment banking at Jefferies, “Today, you’re probably not sending an RFP (request for proposal) to a Chinese company. It’s like, ‘I don’t want to know. It doesn’t matter if they can do it for cheaper. I’m not going to start putting my product into China’.”


Dr. Ashish Nimgaonkar, founder of Glyscend Therapeutics, a US-based biotech firm testing treatments for type 2 diabetes and obesity in early trials, agrees. “All of the factors over the past several years have made China a less attractive option for us,” he said. Nimgaonkar added that Indian contract development and manufacturing organizations (CDMOs) would be preferred over Chinese ones when Glyscend issues an RFP later in the development stage of its medicines in trials.


Four of India’s largest CDMOs, Syngene, Aragen Life Sciences, Piramal Pharma Solutions, and Sai Life Sciences, have seen increased interest and requests from Western pharma companies, including major multinationals. The top executives at these firms said that some customers want to add India as a second source, in addition to China, for manufacturing. Others are seeking to leave China and even making requests to originate supply chains in India.


According to Peter DeYoung, CEO of Piramal Pharma Solutions, the full benefit for these Indian manufacturers will not be immediate. It will take time for treatments in early development to make it to the market, when contracts would become more lucrative for outsourcing firms like his.

Helen Chen, Greater China Managing Partner at L.E.K. Consulting in Shanghai, said that Chinese CDMOs are established makers of biologic drugs, which require a higher threshold of regulatory approval than conventional medicines. She added that hiring a new firm for complex work such as biologic manufacturing can take three to five years. “It’s really not something that companies just pick up and move like shoes.”


India is seeking a bigger foothold in the pharma services sector to boost sales and reputation for its $42 billion pharmaceuticals industry. Nevertheless, concerns over lax oversight persist. Nimgaonkar said Indian CDMOs need to do more to ensure their reputation on quality standards matches Western and Chinese ones.

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