That may allow some of the contract manufacturing and development organisations (CDMO) in India to bag some of the business from the US.
These are the companies, like Divi’s Laboratories, which is the largest player in the space, that manufacture complex molecules, primary ingredients, on demand production of customised compounds, and other necessary inputs for the big pharma companies.
Currently, companies may not have the necessary strength to bag and execute the orders. “India must scale its workforce 6-7 times, streamline regulatory approvals, invest in R&D infrastructure, and enhance domestic production of critical inputs,” consulting firm BCG said in a report released in Feb this year, much before to latest changes to the Biosecure Act.
The combined revenue of Indian CDMOs to surge from the current $3-3.5 billion (about 7% of the global) and BCG expects the number to surge to $22-25 billion by 2035.
Early signs are encouraging. “The essence is very clear, which is towards diversification, towards reducing dependence,” Neeraj Sharma, CEO & MD of the ₹21,200 crore (nearly $2.4 billion) OneSource Specialty Pharma, told CNBC-TV18.
OneSource already seeing a significant increase in requests for proposals and partnership queries, Sharma added.
Stock like Syngene International, Neuland Labs, Jubilant Pharmova, Piramal Pharma, Cohance Labs and Laurus Labs surged on Friday (Oct 11) on hopes of a shift of sourcing from China to India.
Some other CDMO players CNBC-TV18 spoke to expect the size of the industry to at least treble over the next three to four years.
India has a strong foundation in small molecule manufacturing but there are new areas within CDMO where most companies in the country are still in the process of scaling up. What they need is a sizeable workforce, a reliable supply chain, and regulatory simplicity.
However, the industry needs to come of age to be able to make the most of the opportunity.
Big Pharma companies like Pfizer, Merck, or Astrazeneca take time, sometimes years, to finalise a contract. This opens up opportunities for patient and persistent people in business development.
Early business, say the manufacturing active pharmaceutical ingredients (API) for generic drugs, comes with wafer thin margins.
Companies can make juicy profit margins if they rise up the value chain, but that takes years of reliable delivery. “Building trust through intellectual property and data security will be crucial for India to capitalise on this opportunity,” Dhamesha added.
Regulators like the US FDA demand the compliance of the highest order, and that can be costly. Compliance experts, especially with experience in pharma companies selling to the US market, are likely to be in high demand.
The CDMO business is also sensitive to exchange rates. So, a strong finance team with the ability to offset any foreign exchange shocks would be necessary.
A group lead will have to oversee process development, technology transfer, and scale-up projects.
This includes managing a team of chemists and engineers, mentoring and fostering collaboration, and understanding the value chain end-to-end.
Some companies expect the group lead to optimise the chemical processes for yield and purity to ensure the process is cost-effective and scalable.
Monitoring quality of the output and compliance with regulatory standards, both in the product and process, would be essential.
The job entails regularly engaging with the clients for technical discussions, project reporting, and making presentations to upsell services.
The lead may also be expected to identify and implement process improvements, innovations, and new technologies.
Kunal Dhamesha, Pharma & Healthcare Research Analyst at Macquarie Capital, described the Act as “diluted but broadened”, making it less certain that work may get redirected from Chinese CDMOs to those in India.
The Biosecure Act still needs approval from the US House of Representatives before becoming law. Even then, implementation is likely to be gradual as federal agencies need time to rewrite procurement rules.
Also Read | Revised US Biosecure Act unlikely to be beneficial for Indian drugmakers: Research Delta Advisors
