CRDMO Sector to boom by 2035

Overview of CRDMO Sector

The Contract Research Development and Manufacturing Organization (CRDMO) market in India is expanding at a rapid pace, owing to a combination of favorable factors such as cost benefits, technology improvements, and a solid regulatory environment.

According to a research, India’s Contract Research Development and Manufacturing Organization (CRDMO) sector is at a tipping point and has the potential to grow to USD 22-25 billion by 2035. According to a survey by Boston Consulting Group (BCG) and Innovative Pharmaceutical Services Organization (IPSO), India now accounts for 2-3% of the USD 140-145 billion worldwide CRDMO market but it has the skill and potential to grow in years to come.

Tailwinds driving growth

Four important tailwinds propelling sector growth include an effort to de-risk supply chains, which has made India a desirable outsourcing location. Furthermore, economic pressures and laws such as the Inflation Reduction Act (IRA) are driving outsourcing, while increased demand for advanced modalities such as ADCs, gene therapy, and RNA therapies is boosting specialized CRDMO services, according to the report.

Challenges to overcome

As per the report, the sector must overcome five major difficulties in order to grow sustainably. To lessen dependency on imports, the sector needs 6-7x more personnel by 2035, speedier regulatory clearances, and a stronger tier 1 supplier base. Limited funding and high capital costs impede the required 4-5x investment, while ESG compliance remains behind Western rivals, according to the report.

Vikash Agarwalla, Managing Director and Partner at BCG, remarked that the CRDMO business is entering a period of rapid expansion with numerous tailwinds. The BCG report illustrates how India’s natural capabilities, small molecule knowledge, cost competitiveness, and quickly increasing innovation ecosystem serve as a springboard to becoming a dominating player in the global CRDMO market. However, unleashing this full potential will require a collaborative effort from both industry and policymakers.

Government Initiatives driving the CDMO sector

India’s federal government has played a critical role in supporting the CDMO business in the pharmaceuticals manufacturing segment through targeted incentives and legislative frameworks. The PLI initiative, which has a budget of INR 150 billion (US$1.72 billion) for promoting home manufacturing of important Key Starting Materials (KSMs)/drug intermediates (DIs) and APIs, intends to boost domestic drug production while reducing import dependency. Furthermore, the central government has set out INR 69.4 billion (US$799.9 million) to encourage domestic API and bulk medication manufacturing.

Investments towards the CDMO sector

Several top CDMO enterprises in India are making significant expenditures to improve their capabilities and broaden their service offering. Aurigene Pharmaceutical Services, a subsidiary of Dr. Reddy’s, has opened a biologics facility in Hyderabad’s Genome Valley (Telangana) to produce therapeutic proteins, antibodies, and viral vectors. This facility, which has been operational since June 2024, provides comprehensive clinical research and commercial production services.

In January 2024, it was reported that Aragen Life Sciences, a global Contract Research, Development, and Manufacturing Organization (CRDMO), will invest INR 20 billion (US$230.5 million) in Telangana to grow its presence in drug research, development, and manufacturing.

Another crucial investment was done by Laurus Labs, a worldwide pharmaceutical and biotechnology firm headquartered in Hyderabad, is expanding by INR 9.9 billion (US$114.1 million), transitioning from API research to antiretrovirals and intermediates, with the United States and Europe accounting for 60 percent of its income.  Another Telangana-based pharmaceutical business, Jubilant Pharmova, has invested US$370 million to expand its sterile injectable capacity in Spokane and Montreal, bolstering its North American expansion prospects.

Conclusion

India’s CRDMO industry has immense growth potential and can achieve up to USD 22-25 billion by the year 2035, stimulated by beneficial determinants of cost competitiveness, research and development progress, and bolstering regulatory frameworks. Although challenges of increased need for skilled talent and improvement in infrastructure exist for the industry, policy measures and foreign investments are continuously working on it. The nation’s developing innovation ecosystem, cost competitiveness, and small molecule expertise make it a leading candidate to dominate the global CRDMO market. To realize this potential, however, will need sustained partnership between industry players and policymakers to address challenges and unlock the sector’s full growth potential.

The image added is for representation purposes only