India CDMO Market to surge from US$ 22.1 Bn to US$ 54.7 Bn, notes Persistence Market Research

The India Contract Development and Manufacturing Organization (CDMO) market is expected to experience remarkable growth in the coming years, driven by a combination of cost efficiency, advanced manufacturing capabilities, and a highly skilled workforce. The market is projected to expand at a Compound Annual Growth Rate (CAGR) of 13.8%, reaching a market size of US$ 54.7 billion by 2031 from an estimated US$ 22.1 billion in 2024. This surge reflects India's increasing dominance in global pharmaceutical outsourcing, supported by favorable government policies, a robust infrastructure, and a strong track record in generics and biosimilars.

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Market Size and Trends Analysis

India's CDMO market has evolved significantly over the past decade, transitioning from a hub for basic pharmaceutical manufacturing to a sophisticated center for high-quality, complex drug production. The primary drivers of this expansion include the country's cost-effective manufacturing capabilities, its adherence to international regulatory standards, and its expertise in producing both small molecules and biologics. India's leadership in generic drug production, along with the surging global demand for biosimilars, has propelled the growth of the CDMO sector.

In terms of service type, contract manufacturing services dominate, driven by India's established strengths in producing Active Pharmaceutical Ingredients (APIs) and Finished Dosage Forms (FDFs). Contract development services, including research and formulation, also hold a significant share of the market, though they are growing at a relatively slower pace. In terms of product types, small molecules lead the charge, supported by the growing demand for generics and the country's manufacturing infrastructure tailored to produce these drugs at scale.

Key Industry Highlights

India's position as a preferred outsourcing destination for global pharmaceutical companies is strengthened by its ability to offer highly competitive pricing, which is critical in the global race for affordable healthcare solutions. With a well-established supply chain and an emphasis on regulatory compliance, India continues to attract investment in contract manufacturing services, particularly in the production of small molecules and generic drugs.

The country's capacity to support high-volume, cost-efficient production has enabled it to handle increasing global demands, including those for biosimilars, vaccines, and therapeutic proteins. Moreover, India is making significant strides in biologics production, although the infrastructure for these more complex therapies is still under development.

Market Dynamics

Driver: Cost Efficiency and Competitive Advantage

India's cost-effective manufacturing model is the backbone of its competitive advantage. The country's labor costs are significantly lower than in Western markets, which allows CDMOs to offer competitive pricing without compromising on quality. The scale of operations, combined with efficient production processes and a large pool of skilled labor, has made India an ideal outsourcing destination for pharmaceutical companies looking to reduce operational costs.

Restraint: Infrastructure and Technology Gaps

Despite its advantages, India's CDMO sector faces challenges in some high-tech manufacturing segments, particularly in the production of biologics and advanced therapeutics like monoclonal antibodies and cell therapies. Although India's infrastructure supports the mass production of small molecules and generics, gaps in specialized facilities and technologies for biologics manufacturing may limit the country's ability to fully capitalize on this growing segment.

Opportunity: Increase in Outsourcing by Global Pharmaceutical Companies

The growing trend of outsourcing in the pharmaceutical industry presents a significant opportunity for Indian CDMOs. Global pharmaceutical companies are increasingly focusing on core competencies, outsourcing both manufacturing and development services to reduce costs and expedite time-to-market. India's comprehensive service offering, from drug discovery to commercial-scale manufacturing, positions its CDMOs as key players in the global outsourcing ecosystem.

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Category-wise Analysis

The India CDMO market can be broadly segmented into service types, product types, and regional markets.

Service Type: Contract Manufacturing Services is the dominant category, with a projected CAGR of 14.6% through 2031. The growing demand for generics and the ability to scale production efficiently make this segment the most lucrative. In contrast, contract development services are growing at a slower pace, driven by increasing complexity in drug development and formulation services.

Product Type: The Small Molecules segment is expected to witness a CAGR of 14.1% through 2031, primarily due to the robust demand for generics. Small molecules dominate the CDMO landscape, given India's strong capabilities in API production. While biologics and biosimilars are growing, they represent a smaller share of the market, largely due to the advanced infrastructure and investment required to produce such complex drugs.

Regional Insights

India remains a leader in the global CDMO space, but regional variations exist. Major pharmaceutical manufacturing hubs such as Hyderabad, Bengaluru, and Mumbai are home to numerous CDMOs, benefiting from a favorable regulatory environment and established infrastructure. The Indian government's support through initiatives like the Make in India and Production-Linked Incentive (PLI) schemes has further enhanced the growth prospects of these regions.

The southern states, particularly Telangana and Andhra Pradesh, house significant CDMO operations, benefiting from proximity to key biotech parks and robust pharmaceutical clusters. The northern and western regions, including Gujarat and Maharashtra, also hold substantial market shares, particularly in small molecule manufacturing.

Competitive Landscape

India's CDMO market is highly fragmented, with both large, established companies and emerging players vying for dominance. Leading players include:

Piramal Pharma Solutions: A top player in the contract manufacturing space, offering end-to-end services across the pharmaceutical value chain, including API manufacturing, formulation, and packaging.

Syngene International: Known for its expertise in drug discovery and development services, Syngene offers both small molecule and biologics manufacturing capabilities.

Dr. Reddy's Laboratories: With its vast portfolio in generic drug production, Dr. Reddy's is expanding its CDMO services in the biosimilars and biologics spaces.

Divi's Laboratories: A leader in API production, Divi's provides contract manufacturing services for both generic and patented drugs.

Lupin Limited: A major player in the generic pharmaceutical space, Lupin is also investing in contract manufacturing services, especially biologics and biosimilars.

Emerging players like Biocon and Aurigene Pharmaceutical Services are focusing on high-complexity manufacturing, including biologics, therapeutic proteins, and vaccines, to tap into the growing global demand for such products.

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India CDMO Market Segmentation

By Service Type

Contract Development Services
Preclinical Development
Clinical Development
Analytical and Bioanalytical Services
Contract Manufacturing Services
Active Pharmaceutical Ingredients (APIs) Manufacturing
Finished Dosage Forms (FDFs) Manufacturing
Biologics Manufacturing
Packaging

By Product Type

Small Molecules
Biologics
Biosimilars
Vaccines
Others

By Scale of Operation

Commercial Scale
Clinical Scale

By Therapeutic Area

Oncology
Cardiovascular Diseases
Infectious Diseases
Central Nervous System (CNS) Disorders
Others

Recent Developments

In June 2024, Lupin Pharma entered the CDMO space with the launch of a new subsidiary, Lupin Manufacturing Solutions (LMS), aimed at expanding its contract development and manufacturing services. The company's strategic move is designed to tap into the growing demand for high-quality manufacturing services globally.

In May 2023, Aurigene Pharmaceutical Services, a division of Dr. Reddy's Laboratories, announced a $40 million investment to build a state-of-the-art facility for the production of therapeutic proteins, antibodies, and viral vectors in Genome Valley, Hyderabad. This facility, expected to become operational by the first half of 2024, highlights India's growing capabilities in biologics manufacturing.

Future Outlook

The future outlook for India's CDMO market remains positive, with sustained growth expected across both generics and biologics. The market is poised to benefit from increasing demand for high-quality, cost-effective therapies, particularly in the wake of patent expirations for several blockbuster drugs. As India continues to enhance its infrastructure, particularly in biologics and biosimilars production, its position as a global outsourcing hub will only solidify.

The market is also expected to see significant technological advancements, with Indian CDMOs investing in continuous manufacturing, bioprocessing, and other cutting-edge technologies. These innovations will help Indian companies compete with global players and capitalize on emerging opportunities in advanced therapeutics, such as cell and gene therapies.

As India continues to expand its global presence, particularly in North America and Europe, the country's CDMO market is set to maintain its growth trajectory, driven by both cost advantages and a growing portfolio of complex, high-demand products.

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