Indian Drug Makers Benefit From Big Pharma Interest Beyond China

Soaring tensions with China have prompted more Western countries to recommend that companies "de-risk" supply chains from exposure to the Asian superpower

Four of India's largest CDMOs - Syngene, Aragen Life Sciences, Piramal Pharma Solutions, and Sai Life Sciences – said they have this year seen increased interest and requests from Western pharma firms, including major multinationals.

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In a move benefitting India, drugmakers are seeking to limit their reliance on Chinese contractors who produce drugs used in clinical trials and early-stage manufacturing, citing pharma executives and experts news agency Bloomberg said. According to the report, China has for almost 20 years been the preferred location for a range of pharmaceutical research and manufacturing services because of low cost and speed offered by contract drugmakers.

The relationship largely held firm despite a US-China trade war under the Trump administration and supply chain havoc experienced by other industries during the Covid-19 pandemic. However, soaring tensions with China have prompted more Western countries to recommend that companies "de-risk" supply chains from exposure to the Asian superpower.

That is leading some biotech companies to consider using manufacturers in India to produce active pharmaceutical ingredient (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, global co-head of healthcare investment banking at Jefferies. "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, the founder of Glyscend Therapeutics, a US-based biotech firm 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 said.

Nimgaonkar told Reuters that when Glyscend issues an RFP later in the development stage of the medicines it has in trials, Indian contract development and manufacturing organisations (CDMOs) would be preferred over Chinese ones.

Four of India's largest CDMOs - Syngene, Aragen Life Sciences, Piramal Pharma Solutions, and Sai Life Sciences – said they have this year seen increased interest and requests from Western pharma companies, including major multinationals.

Sai declined to comment on profit growth but said sales have grown 25 per cent-30 per cent in recent years. The other companies said they reported strong profit growth in the most recent quarter.

Top executives at the firms said 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.

The full benefit for these Indian manufacturers will not be immediate, said Peter DeYoung, CEO of Piramal Pharma Solutions. 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, he said.

Chinese CDMOs are established makers of biologic drugs, which require a higher threshold of regulatory approval than conventional medicines, said Helen Chen, Greater China Managing Partner at L.E.K. Consulting in Shanghai.

Hiring a new firm for complex work such as biologic manufacturing can take three to five years, she added. "It's really not something that (companies) just pick up and move like shoes."

Strong growth India is seeking a bigger foothold in the pharma services sector to boost sales and reputation for its $42 billion pharmaceuticals industry. But 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.