India Contract Manufacturing Organization (CMO) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

India Contract Manufacturing Organization (CMO) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Indian CMO market is expected to register a CAGR of 13.3% during the period of 2021 - 2026. The rise in demand for injectable drugs, especially in cancer research, will upwardly trend the Indian pharmaceutical contract manufacturing market. Injectable drugs offer higher returns as compared to other drug formulation types. Therefore, higher ROI and therapeutic efficiency are expected to fuel the growth of the injectable formulation segment in the country.

Key Highlights

• Over the past few decades, India has taken a major leap from pharmaceutical production to include contract manufacturing. As per Indian Drug Manufacturers' Association, the pharma CMO industry is providing a significant opportunity for small and medium enterprises.
• In basic manufacturing of medical drugs and products, India has a superior edge over nations, such as Vietnam, China, and Ireland, due to resources including manpower, technically knowledgeable workforce, and WHO-GMP approved production premises.
• The scale-up of drug synthesis and late clinical trials have become a suitable protocol in the country. Along with it, DTAB (Drug Technical Advisory Board) has also agreed to grant wavier to the late stage (Phase III) studies of certain drugs in the country, which are from the regulated markets of the US and Europe. These incentive step translates into enormous cost savings for pharmaceutical companies, thereby increasing their focus on India.
• During the Covid pandemic, several initiatives were taken by the Union Cabinet to boost the pharma industry, which includes the amendment of the existing Foreign Direct Investment policy to allow FDI to invest up to 100 percent under the automatic route for manufacturing medical devices subject to certain conditions.
• Additionally, several Indian pharmaceutical companies have been working in order to develop or manufacture at least eight anti-Covid-19 formulations as one of the world's largest producers of vaccines is preparing for a massive response to the COVID-19 pandemic. For instance, the Serum Institute of India (SII), which is one of the largest vaccine producers, was manufacturing AstraZeneca's Covishield and another formulation that US rival Novavax Inc developed.​
• Moreover, the country is a significant exporter of pharmaceutical solutions. For instance, the United States relies on India to import services and establish its plants in the country. A substantial 40% lower cost of operation and production is why multinational companies consider India for their outsourcing requirements. With the advent of global pharmaceutical organizations, and their rapidly growing presence in India, the concept of contract manufacturing has steadily evolved and quickly adapted to encompass services, such as formulation development, basic manufacturing of medicinal products, stability studies, and various stages of clinical trials.

Key Market TrendsGeneric Medicine Under Solid Finished Dose Segment Holds the Significant Share in The Market

• The solid dose formulation segment is mainly dominating the finished dose segment in India, owing to lower manufacturing costs, patent compliance, and ease of maintenance. Solid dosage forms, such as tablets, pills, capsules, powders, etc., are among the most adopted products in the country. The growth of generics drugs is one of the major factors driving the growth of the segment, and India is the largest exporter of generic drugs and accounts for approximately 20% of global exports by volume.
• The players catering to the market are looking to strengthen their competitiveness through various growth strategies, such as investments into new production facilities and acquisitions and mergers. For instance, in Jun 2020, Piramal Enterprises Limited, a prominent CDMO player, announced an agreement with G&W Laboratories Inc. to acquire the latter's solid oral dosage drug product manufacturing facility located in Sellersville, Pennsylvania.
• Furthermore, the Indian pharmaceutical companies are leading the way in developing generic drugs in Mexico, and they are investing heavily in the country. Further, in October 2020, Six Indian generics makers have signed letters of intent with the state of Hidalgo, Mexico, to establish a pharma hub for manufacturing and logistics. The targeted drugmakers such as Dr. Reddy's, Zydus Cadila, Glenmark, Torrent, and Hetero will access a USD 10.6 billion Mexican drug market.​
• Also, new global opportunities are being made by generic manufacturers producing modified versions of approved off-patent small-molecule drugs. These so-called 'super generics offer a therapeutic advantage, distinguishing them from conventional generic drugs. For instance, India-based Ranbaxy Laboratories developed a once-a-day ciprofloxacin tablet and licensed it to Germany-based Bayer AG.

Drugs and Pharma Exports in United States Account for Significant Market Growth

• Indian drugs are exported to more than 200 countries in the world, with the US being the key market. According to RBI, the Indian pharmaceutical sector contributes about 2 percent to India’s GDP and around 8 percent to the country’s total merchandise exports.
• Generic drugs account for 20% of the global export in terms of volume, making India the largest provider of generic medicines globally. In the covid phase, India’s drugs and pharmaceuticals exports stood at USD 3.76 billion between April 2021 and May 2021 (source: IBEF).
• Global private equity (PE) investors are in a rush to bet on Indian firms that are in the thriving business of manufacturing active pharmaceutical ingredients (API), vaccine-related manufacturing, and producing bulk pharmaceutical chemicals. For instance, in July 2020, US-based Advent International agreed to acquire a controlling stake in RA Chem Pharma from its parent Micro Labs, while another US-based giant, KKR, also agreed to acquire a 54% stake in JB Chemicals and Pharmaceuticals for USD 611 million.
• As per the department of commerce estimates for FY-21, North America is the largest exporting region for India, with more than 34 percent share. Wherein the country-wise exports to USA, Canada, and Mexico recorded growth of 12.6 percent, 30 percent, and 21.4 percent respectively.

Competitive Landscape

The India Contract Manufacturing Organization (CMO) market is fragmented, with the top vendors accounting for a significant share of the total market. Apart from these major players, there are several players in the market that are investing in innovation and partnership activities to gain an increased market share. Therefore, the intensity of competitive rivalry is high. Key players are Dr. Reddy’s Laboratories, Cadila Healthcare Limited, and Cipla Ltd., etc. Recent developments in the market are -

• August 2021 - Cipla Limited and Kemwell Biopharma Private Limited, a biopharmaceutical Contract Development and Manufacturing Organization (CDMO) announced a joint venture agreement to develop, manufacture and commercialize biosimilars for global markets. Resultantly, a joint venture company would be incorporated to enter the respiratory biosimilars space. Under the terms of the agreement, the joint venture would leverage Cipla and Kemwell’s complementary strengths for end-to-end product development, clinical development, regulatory filings, manufacturing, and commercialization of biopharmaceutical products.
• June 2021 - Eisai Co., Ltd. and Bristol-Myers Squibb Company announced a global strategic partnership agreement to develop and commercialize MORAb-202, an antibody-drug combination (ADC). MORAb-202 will be developed and commercialized jointly by Eisai and Bristol Myers Squibb under the terms of the agreement. Eisai would remain responsible for the manufacturing and supply of MORAb-202 globally.

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• The market estimate (ME) sheet in Excel format
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