Suven Pharmaceuticals, a contract development and manufacturing services (CDMO) company backed by private equity firm Advent International, is experiencing a significant uptick in engagement from global pharmaceutical companies seeking to reduce their reliance on China amid ongoing trade tensions and concerns over the proposed U.S. Biosecure Act, the company's Chairman Vivek Sharma told Moneycontrol from the US.
Sharma said he is seeing a "sense of urgency" among senior management of global pharmaceutical companies, who are making a beeline to explore alternate options to de-risk beyond China.
Some of the global companies have even made proposals of co-investment to set up manufacturing capacities.
Sharma pointed to recent examples such as heightened engagement at the DCAT Week, a premier annual event held in New York City last month, for companies involved in the pharmaceutical manufacturing value chain.
"The number of meetings we saw and the quality of meetings, not just the quantity, the level of engagement from senior level to stay committed to work with us was very, very positive," Sharma said.
He also cited visits from high-level executives from major international firms to Suven Pharma, including a three-day visit from a large European pharma services provider in early April and an upcoming visit from the CEO of another major global service provider. The head of R&D from a large US West Coast company also made a recent, quickly arranged trip.
"Everybody is looking at an alternative strategy to de-risk," Sharma said.
He noted that the "anti-China narrative actually started before even Trump came in". This sentiment, coupled with potential tariffs, is prompting pharmaceutical companies to seek alternative partners. "Everybody... they all have China-free strategy," Sharma said.
Can Suven Pharma grab the opportunity?
While acknowledging that changes in the highly regulated pharma and CDMO sectors take time due to factors such as tech transfer and regulatory processes, Sharma sees clear indications of acceleration. "The kind of interest we are seeing from potential customers is much bigger now than it was before," he said.
Sharma said the company is strategically positioning itself to capitalise on emerging opportunities in the global CDMO market by investing in scaling up capacities and capabilities. The company is particularly focused on advanced areas such as antibody-drug conjugates (ADCs), peptides, and oligonucleotides, while also expanding its capabilities and geographic reach.
The company was "proactive" in investing in its US-based NJ Bio site even before the push for more US manufacturing. Plans are underway to add more capital to this site, specifically expanding conjugation and R&D capabilities. "We will continue to invest... wherever it makes business sense". As an M&A-driven company, Suven is also "looking for other assets that make business sense," Sharma said.
In addition to expanding its physical infrastructure, Suven is also open to exploring new collaboration models, including co-investment with partners who require dedicated capacity for molecules progressing to later clinical stages or commercialisation.
While the reports on China's CDMO market are conflicting, even by conservative estimates it generated a revenue of $17.52 billion in 2023, projected to grow to $30.63 billion by 2030, at a CAGR of 8.3 percent.
According to a recent BCG-IPSO report, the Indian CRDMO industry today is $3–3.5 billion making up only 2–3 percent of the global CRDMO market. The report highlighted the market potential to grow to $22-25 billion by 2035, driven by global supply chain realignments, advanced modalities such as ADCs and RNA therapeutics, and increasing R&D investments.
Potential key drivers
A key focus area for Suven is the burgeoning ADC market. Sharma is optimistic about the opportunities here, citing growth with existing customers and the emergence of new ones. The company's expertise in linker and conjugation is a critical part of its ADC capabilities.
Suven is also heavily invested in oligonucleotides, with a GMP site under construction in Hyderabad set to be ready later this year. Sharma is seeing increased investment and progress in the oligonucleotide space and is excited about moving "up the value chain" with expanded capabilities.
The company is also exploring opportunities related to upcoming patent expirations for diabetes and weight-loss drugs, engaging in discussions with potential customers and working on early-stage projects in the weight-loss category. These efforts are focused on the CDMO side of the business.
Financially, Suven appears to be on solid ground to support its growth ambitions. While not disclosing specific investment numbers, Sharma indicated that the current capital requirements for organic growth are largely met with existing investments of around Rs 450 crores in the Cohance platform and Rs 200 crore at Suven Pharma over the last few years. It has the "capability to invest" further as needed, with a strong cash flow and low debt.
Sharma said Suven is also undergoing an internal integration, bringing together six different platforms under one value system, performance evaluation system, and strategy.
With the recent NCLT approval for the merger with Cohance, the company is moving towards operating as a single entity, which will eventually be rebranded as Cohance. Sharma said that internally they are already operating as one company with integrated functions and shared services.
$1 billion goal
Looking ahead, Suven Pharma has set an ambitious target to reach $1 billion in revenue by 2030. This will be achieved through a combination of organic growth, driven by a strong pipeline of new products in API and agrichemical businesses, as well as momentum in the CDMO segment with molecules progressing to commercialisation. The company has also invested in expanding its commercial teams in key markets such as the US and Japan to drive growth. Inorganic growth through further acquisitions of complementary capabilities will also play a role.
Sharma remains highly optimistic about India's potential in the CDMO space, stating, "India has to grow, and India will grow". He attributes this to the struggles faced by global pharma companies in terms of capacity and cost, and the increasing trend of outsourcing. "Outsourcing has been on the rise... the trend will continue," he said.
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