Suven to Divi’s: Indian CDMOs seize opportunity in pivot away from China amid global trade tensions

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26 Aug, 2025 12:21

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Suven Pharmaceuticals, Syngene International, Laurus Labs, and Divi’s Laboratories are among the key Indian beneficiaries of the global pharmaceutical sector’s pivot away from China.

A mix of geopolitical friction, supply chain vulnerabilities, and the threat of new trade tariffs is accelerating the shift, presenting a golden opportunity for India’s Contract Development and Manufacturing Organisations (CDMOs). As international drugmakers increasingly seek to diversify away from China, Indian firms report a surge in interest, investment, and strategic partnerships.

The "China plus one" strategy, a move by companies to reduce over-reliance on Chinese manufacturing, isn't new, but recent events have injected a palpable "sense of urgency". Concerns around the proposed US Biosecure Act, lingering trade tensions, and the spectre of potential US tariffs are compelling global pharma executives to actively court alternatives. "Everybody... they all have China-free strategy," said Vivek Sharma, Executive Chairman of Suven Pharmaceuticals.

'Beeline' for alternatives

Suven Pharmaceuticals, backed by private equity giant Advent International, finds itself at the heart of this shift. Sharma reports a significant uptick in high-level engagement, citing more numerous and higher-quality meetings at industry events like DCAT Week in New York. Visits from senior executives of major European and US firms have become commonplace, with some even proposing co-investment to build dedicated capacity. "Everybody is looking at an alternative strategy to de-risk," Sharma said.

While acknowledging that switching suppliers in the highly regulated pharma sector takes time, Sharma sees clear acceleration. "The kind of interest we are seeing from potential customers is much bigger now than it was before," he said. Suven is strategically investing to meet this demand, scaling up capabilities in advanced areas like antibody-drug conjugates (ADCs), peptides, and oligonucleotides, including expanding its US-based site. The company aims for $1 billion in revenue by 2030, fuelled partly by the CDMO momentum.

Syngene converts interest into contracts

It isn't Suven alone. Syngene International echoes this experience, noting a "continuing pipeline build of pilot programs deriving from large and medium sized pharma companies as they rebalance their China plus one supply chain networks," the company's management said in their recent earnings call. Crucially, Syngene has successfully converted the majority of these pilots into full program contracts.

To further solidify its position and offer clients supply chain security, Syngene acquired a state-of-the-art biologics manufacturing facility in the US. While acknowledging macro uncertainties like the Biosecure Act and tariffs, Syngene expresses confidence in its diversified portfolio to navigate these dynamics and expects underlying revenue growth in the early teens for FY26.

Laurus Labs bets on CDMO diversification

Laurus is also strategically shifting its focus, reducing its historical reliance on antiretroviral (ARV) APIs and aggressively expanding its CDMO business. Its CDMO small molecule division saw a robust 49 percent growth in FY25, driven by late-stage projects and new assets coming online. The company highlights a growing pipeline of over 110 active projects, increasingly involving high-value work for Big Pharma leveraging cutting-edge technologies like flow chemistry and biocatalysis.

Laurus is backing this strategy with significant capital, planning around Rs 1,000 crore ($120 million) capex in FY26, largely directed towards CDMO and Contract Manufacturing projects, including doubling its fermentation capacity. While some innovators seek a completely "China-free" supply chain, Laurus notes that sourcing remains a balancing act and significant shifts take time due to lengthy validation processes.

Industry deals underscore the trend

The trend is manifesting in concrete deals. Divi's Laboratories recently signed a long-term manufacturing and supply agreement with an unnamed global pharma major for advanced intermediates. Supporting this, Divi's announced plans to invest Rs 650-700 crore ($78-84 million) in capacity expansion, funded internally, aiming to secure supply for its customers and expand its own custom synthesis footprint.

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 antibody drug-conjugates (ADCs), oligonucleotides, peptides, biologics, RNA therapeutics, and increasing R&D investments.

Despite ongoing global economic uncertainties and the complexities of pharma supply chains, the sentiment among Indian CDMO leaders is bullish. They point to the increasing trend of outsourcing driven by global pharma's capacity and cost challenges. "Outsourcing has been on the rise... the trend will continue," noted Suven's Sharma. "India has to grow, and India will grow," he said. As global pharmaceutical giants redraw their manufacturing maps, Indian CDMOs are positioning themselves as key destinations.