After WuXi AppTec faced a "choke point," these Indian CDMOs are frequently coming up with new strategies to "fill the gap."

The "Biosafety Act" and larger potential capacity issues are prompting some Western pharmaceutical, biotechnology, and life sciences companies to explore other CDMO options. Among them, South Korea and India, as two member countries of the "Biosafety Alliance," seem to be the biggest direct beneficiaries.

Increasing Attention Towards India

Since the controversy surrounding the "Biosafety Act," several CDMO companies in India have noticed an increase in foreign biopharmaceutical companies visiting their sites, showing a growing interest in their solutions. Syngene International, a multinational CDMO company headquartered in India, has seen a rise in interest from international pharmaceutical and biotechnology companies. Alex Del Priore, Senior Vice President and Head of Manufacturing at Syngene International, mentioned that more visitors have been touring Syngene's facilities and engaging in more collaborative discussions.

This trend is not isolated. Another Indian CDMO company is also attracting major biotechnology and pharmaceutical companies. Enzene's CEO, Himanshu Gadgil, stated that there has been a significant increase in interest and site visits from large pharmaceutical and biotechnology companies so far this year. Many companies aim to diversify their supply chains, reducing their reliance on China, while establishing secondary suppliers amid escalating U.S.-China tensions. "We have witnessed a substantial increase in client visits, indicating a strong market demand for our production solutions, especially for complex biologics."

Aragen Life Sciences is another Indian CDMO company experiencing an uptick in site visits since the "Biosafety Act" was enacted. Its CEO, Manni Kantipudi, sees this as an opportunity for his company and its Indian competitors. He predicts that the competitive landscape of the Indian CDMO industry will undergo significant changes in the next five years, particularly due to the increasing focus on biologics and advanced manufacturing technologies.

Low Costs, API Production Capacity, and Independent Flexibility: The Advantages of Indian CDMOs

Compared to South Korean CDMOs, which have technological advantages and have recently secured numerous large contracts, Indian CDMOs stand out in commercial production for Western markets due to their ability to combine this trend with lower costs and efficient cost management. Previously, India's strengths lay in small molecule drug production and active pharmaceutical ingredient (API) manufacturing, with many facilities approved by the U.S. Food and Drug Administration (FDA), providing a substantial capacity foundation.

Now, Indian CDMOs are increasingly investing in biologics production capabilities to replicate their success in small molecule drugs and APIs in the large molecule biologics field.

For example, Enzene announced at the BIO International Convention the establishment of a Drug Discovery Division and plans to construct a 54,000 square foot, $50 million facility in Hopewell, New Jersey, set to open in the third quarter of 2024. This will be the first U.S. production site with a fully connected continuous production platform, employing over 300 staff members.

Enzene has capabilities for producing complex proteins and standard models using CHO and mammalian cell lines. CEO Himanshu Gadgil claims that EnzeneX bioprocessing technology can increase productivity tenfold compared to traditional fed-batch methods, reducing operational footprint by 70%.

Enzene focuses primarily on developing and manufacturing biosimilars, utilizing its advanced pipeline and EnzeneXTM continuous bioprocess manufacturing technology to develop, produce, and launch a range of biosimilar products. These include drugs for osteoporosis like Teriparatide (Forteo?) and giant cell tumor medications like Denosumab (Xgeva?), with products sold in India and globally.

Even mature formulation companies in India with long-term collaborations with global innovation companies are establishing API and CDMO divisions. Sun Pharma, India's largest pharmaceutical company, offers contract research and manufacturing services, with 5% of its 433 billion rupee sales in fiscal year 2023 coming from APIs and other pharmaceutical solutions. Cipla, once one of the largest API suppliers globally, derived 4% of its 227.53 billion rupee business (FY 2023) from APIs and pharmaceutical technology solutions. Other companies establishing CDMO subsidiaries include Aurigene and Lupin—details can be found in the article "Are the Top Three Indian Pharmaceutical Companies Entering the CDMO Sector, Riding the Wave of the "Pharmaceutical Alliance"?"

Industry estimates project the Indian CDMO market to grow at a compound annual growth rate of 14.67%, from $19.63 billion in 2023 to $44.63 billion by 2029. This growth is driven by the expected expiration of patents on many new molecules in the coming years, creating opportunities for APIs and contract research.

Syngene International's Del Priore has observed a steady shift since COVID-19, with global pharmaceutical companies increasingly looking to India and Southeast Asia as alternative supply chain destinations. The controversy surrounding WuXi AppTec has merely accelerated an already existing trend, making it a certainty.

Jonathan Hunt of the same company stated that only a few organizations globally possess the full set of skills and tools needed from early research to patient trials. A few years ago, Syngene International decided to integrate forward, first entering development services and then manufacturing.

Syngene International is an integrated research, development, and manufacturing services company serving the global pharmaceutical, biotechnology, nutrition, animal health, consumer goods, and specialty chemicals industries, with over 6,000 scientists. In June, Syngene International launched a new protein production platform using cell line and transposon-based technology licensed from Swiss biotechnology services company ExcellGene, combined with Syngene's clone selection and development processes to improve protein yields, speeding up preclinical and clinical development as well as product launch timelines. Its newly upgraded biologics facility (Unit 3) in Bangalore, India, is also scheduled to become operational in the second half of 2024, providing clinical and commercial supply for U.S. and European clients.

Syngene also pioneered the industry by proposing that no resources from Chinese suppliers be used in the entire production process of potential drugs, viewing this as one of its competitive advantages. Learning from the experiences of WuXi AppTec and the "Biosafety Act," maintaining independence from Chinese suppliers has now become part of the strategic planning for Indian CDMOs.

India to Become the Fastest-Growing Country in the CDMO Sector

Three years ago, even before the "Biosafety Act" was introduced, Mantell Associates had already predicted that India would become the fastest-growing country in the CDMO (Contract Development and Manufacturing Organization) sector. Mantell Associates attributed this growth to several factors, including lower R&D costs and advanced facilities. Therefore, the entry of Indian CDMO companies as WuXi AppTec exits the U.S. market is not surprising.

Aragen Life Sciences, headquartered in Hyderabad, South Central India, serves over 1,000 global innovative companies, aiding in the discovery and development of new drugs and devices. Known as the "CDMO mini-capital" of India, Hyderabad plays a pivotal role in this sector.

Manni Kantipudi, CEO of Aragen, stated that the company is making strategic investments to increase its clinical production capacity and expand its small molecule and biologics businesses. Earlier this year, Aragen Life Sciences announced new expansion plans, investing 2 billion Indian rupees and creating 1,500 new jobs. This investment will help the company further expand its existing facilities in Mallapur, Telangana.

Del Priore from Syngene International emphasized that new gene companies will focus their investments in strategic areas of the industry. "We will continue to invest in new modalities such as PROTACs (Proteolysis Targeting Chimeras) and Antibody-Drug Conjugates (ADCs), and increase our investments in AI, automation, and digitalization. We believe these will be key to enhancing efficiency, quality, and accelerating client delivery times."

Syngene International, with over 6,000 scientists, serves the global pharmaceutical, biotechnology, nutrition, animal health, consumer goods, and specialty chemicals industries. In June, Syngene launched a new protein production platform using cell line and transposon-based technology licensed from Swiss biotechnology services company ExcellGene, combined with Syngene's clone selection and development processes to improve protein yields and speed up preclinical and clinical development as well as product launch timelines. Its newly upgraded biologics facility (Unit 3) in Bangalore is scheduled to become operational in the second half of 2024, providing clinical and commercial supply for U.S. and European clients.

Moreover, Syngene has pioneered the industry by proposing that no resources from Chinese suppliers be used in the entire production process of potential drugs, viewing this as one of its competitive advantages. Learning from the experiences of WuXi AppTec and the "Biosafety Act," maintaining independence from Chinese suppliers has now become part of the strategic planning for Indian CDMOs.

With these ongoing investments and strategic moves, India's CDMO sector is poised for rapid growth, positioning the country as a significant player in the global pharmaceutical landscape.

The Future of Biopharmaceutical CDMOs: Expanding the Market and Centralized Procurement

Although the revised "Biosafety Act" has accelerated the shift of biopharmaceutical companies currently contracting with Chinese CDMOs towards other options, whether Indian CDMOs can capitalize on the WuXi AppTec controversy and gain market share amidst the competition from technologically advanced South Korean and Japanese CDMOs remains uncertain.

However, Himanshu Gadgil believes that the biopharmaceutical outsourcing industry's increasing trust and maturity will drive significant growth in global demand for CDMO services in the coming years. "With the return of biotech funding and biotechs more likely to advance their targets into development, along with pharmaceutical companies pushing more targets than before, the industry’s strong mid-term outlook is easy to predict."

Manni Kantipudi echoes this sentiment, noting that the rise of CDMOs is a more enduring trend than the shifts seen during the COVID-19 pandemic. COVID-19 established outsourcing as a 'must-have' strategy rather than a 'nice-to-have' for the global life sciences industry. The "Biosafety Act" and the associated controversies have prompted Western pharmaceutical, biotechnology, and life sciences companies to reevaluate their strategies.

According to a recent report by Nova One Advisor, the global pharmaceutical CDMO market was valued at $146.29 billion in 2023 and is projected to reach approximately $295.95 billion by 2033, with a compound annual growth rate (CAGR) of 7.3% from 2024 to 2033. If the industry continues to recover post-COVID and enters an upward phase, this significant market expansion could lead to a more competitive landscape.

In addition to the WuXi AppTec controversy and the "Biosafety Act," Del Priore from Syngene International pointed out another trend in the CDMO industry. He noted in an interview that large pharmaceutical and biotechnology companies prefer to work with fewer but more capable CDMOs to advance multiple targets simultaneously. This implies that future orders will increasingly flow towards large-capacity companies, making it harder for smaller companies to stand out.

Building on this, Del Priore highlighted another notable trend: CDMOs need to invest in technology and capacity ahead of demand for future drugs. This is why Syngene International continues to focus on titer improvement technologies (particularly perfusion technology) and areas like artificial intelligence. Investing in these technologies will be crucial for enhancing efficiency, quality, and speeding up client delivery times, aligning with the industry's evolving needs.

In summary, the future of biopharmaceutical CDMOs looks promising, with substantial growth expected as the market expands. Indian CDMOs, in particular, have the potential to benefit from these trends if they continue to invest in advanced technologies and expand their capacities to meet the increasing global demand for outsourcing services.