Moneycontrol Pro Panorama | Big pharma’s vote of confidence in India

The announcements by global drug majors reinforces India’s importance in global pharma chains.

Dear Reader,

Amid US president Donald Trump’s threats to curb imports of pharmaceutical products into North America, India’s life sciences industry is receiving a quiet but substantial vote of confidence from global companies. After Roche, Eli Lilly has said it will invest large amounts in India to boost its capabilities.

The announcements by global drug majors reinforces India’s importance in global pharma chains. India is already a technology hub for global life sciences companies. The country hosts global capability centres (GCC) of 23 of the world’s top 50 life sciences companies, points out EY India.

Crucially, the GCCs are increasingly playing an important role in core operations of the global life sciences companies. Their role in core functions such as drug discovery and development, regulatory affairs and commercial operations is deepening, say experts at EY India. Cost arbitrage and abundant talent pool are driving global life sciences companies to India.

The rising footprint of global companies in India bodes well for local industry. A significant portion of Eli Lilly’s latest investments are expected to be used in sourcing of supplies from manufacturers in India.

Together, the Roche and Eli Lilly investments can add sizeable revenues to local contract research, development, and manufacturing organisations (CRDMOs). “We think these two investments alone could drive 6-8 percent incremental growth CAGR for the industry if the investment fully ramps up,” analysts at Jefferies India said in a note. CAGR is compound annual growth rate.

Readers may note that the Indian CRDMO industry is growing at a healthy pace, helped by increasing collaborations with global innovators and drug companies, as we explained here. Low-cost manufacturing and availability of specialised skills are giving India a competitive advantage.

With pressure on prices and patents for large number of drugs set to expire in 2025-2030, global drug companies are increasingly looking for cost effective solutions. This is driving outsourcing in the pharma industry.

The overall penetration of the global R&D outsourcing services market increased to 41 percent in 2023 and is expected to rise further, as per Sai Life Sciences. Around half of the global active pharmaceutical ingredients (APIs) are estimated to be sourced from outsiders. The global growth in API outsourcing is expected to outpace the growth in captive production.

The data indicates dispersed supply-chains of global pharma, a phenomenon unlikely to be changed with short-term policy measures. India, with large number of CRDMOs and API manufacturers, can benefit from current trends. The key is continued government support, favourable trade pacts, and nurturing the factors that drive up the country's competitive advantage.

Investing insights from our research team

LG Electronics IPO: Is this the right time to invest in a trusted consumer brand?

Is recovery in sight for ZF Commercial Vehicle?

NMDC: Riding on strong steel demand, better pricing

Tracker

Pro Economic Tracker | Auto sales rise for second week, industrial output weakens

What else are we reading?

The regulatory deficit that turns India's pharmaceutical strength into fatal weakness

Chart of the Day: Earnings cuts prelude to Q2 FY26 results season

Glimmer of festive cheer in early Q2 metrics of lenders, but risks remain

The difficult art of successful trading in the new F&O regime

A durable peace in the Middle-East remains a mirage

OpenAI’s computing deals top $1tn (republished from the FT)

Can you claim ownership of your AI-generated creatives?

Taking cue from China for building copper reserves in India

RSS’ Vision and the Six Global Transitions: Can India chart its own course?

Trillions are stuck in disputes at commercial tribunals but reform agenda ignores it

Will AI open the Nobel door for the global south or shut it further?

India takes on Google’s digital advertising monopoly

Markets

Will focus on active, retail equity assets; cost-to-income headroom available: Canara Robeco CEO Rajnish Narula

Tech and Startups

Zoho to introduce end-to-end encryption for text chats on Arattai, says CEO Mani Vembu

Technical Picks: IGL, TIINDIA, ASIANPAINT

R Sree Ram

Moneycontrol Pro