Pharma Shift: India Gains as Companies Reduce China Reliance

Pharmaceutical companies are actively seeking to reduce their dependence on Chinese contractors responsible for manufacturing drugs used in clinical trials and early-stage production. This strategic shift is proving advantageous for Indian counterparts, as reported by 10 industry executives and experts, as per a The Hindu report. For almost two decades, China has been the preferred destination for various pharmaceutical research and manufacturing services, due to the cost-effectiveness and efficiency offered by contract drugmakers in the region.

Despite challenges such as the U.S.-China trade war and disruptions in supply chains during the COVID-19 pandemic, the relationship persisted. However, escalating tensions with China have prompted Western governments to advise companies to "de-risk" their supply chains from reliance on the Asian powerhouse. This shift in geopolitical dynamics has led several biotech companies to explore alternatives, with India emerging as a viable option for manufacturing active pharmaceutical ingredients (API) used in clinical trials and other outsourced tasks.

Tommy Erdei, global co-head of healthcare investment banking at Jefferies, noted the reluctance to engage with Chinese companies, stating, "Today you're probably not sending an RFP (request for proposal) to a Chinese company. It's like, 'I don't want to know, it doesn't matter if they can do it for cheaper, I'm not going to start putting my product into China'." Dr. Ashish Nimgaonkar, founder of Glyscend Therapeutics, a U.S.-based biotech firm focused on type 2 diabetes and obesity treatments in early trials, expressed similar sentiments, stating that recent developments have made China a less attractive option.

Four of India's major Contract Development and Manufacturing Organizations (CDMOs) – Syngene, Aragen Life Sciences, PiramalPharma Solutions, and Sai Life Sciences – have reported increased interest and requests from Western pharmaceutical companies, including major multinational corporations, throughout the current year.