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_SOne sector that has been growing at a fast pace in india over past few years is the CDMO sector i.e contract development and manufacturing
its a very important part of the pharmaceutical supply chain
in simple terms it is international companies outsourcing research and manufacturing to indian companies
some of the oldest CDMO companies in india are divis lab and piramal pharma which have already seen huge rallies
but here is where it gets interesting
one very big positive triggers for CDMO companies is the US biosecure act that was recently passed in September
The US Biosecure Act aims to move its supply chains away from China, presenting a huge opportunity for India’s pharma industry
the biosecure act proposes to ban chinese biotech companies operating in the US
veteran investor madhu kela recently said the CDMO sector in india can grow five fold in the next decade
because of the geopolitical tension between US and China, a lot of contract manufacturing that was meant for china could now further move to india
india has become a very appealing CDMO destination due to low manufacturing prices, foreign direct investments and government incentives like the PLI scheme
companies that are right up there in CDMO manufacturing are Divis labs , piramal pharma, laurus labs, syngene , neuland labs and suven pharma
58% of piramal pharma sales comes from CDMO services
Piramal pharma aims to double its turnover to $2 bn by 2030, driven by the CDMO business
Jonathan Hunt of Syngene has observed a ‘material shift’ in Big Pharma’s sourcing strategies to mitigate risks. Syngene has indicated that it is participating in pilot projects related to the ‘China Switch’ opportunity and has seen a 50% year-over-year increase in RFPS in terms of value in the first quarter—its best performance in four years.
The synergy of the US Biosecure Act, India’s robust manufacturing capabilities, and rising global demand creates a lucrative opportunity for domestic firms.
What do you think ?
Disclaimer: these are not recommendations , please consult your SEBI registered investment advisor before any investment
@_soniashenoy
