CDMO is the biggest theme; select companies can grow 5 times in next 10 years: Madhusudan Kela

  • CDMO is the biggest theme; select companies can grow 5 times in next 10 years: Madhusudan Kela
  • One big theme from a 10-year perspective is CDMO.
  • Geopolitical tensions between the US and China are pushing contract manufacturing business to India. Madhusudan Kela believes that the Contract Development & Manufacturing Organization (CDMO) sector could grow five-fold in the next decade. 
  • He emphasizes the importance of flexibility and having an open mind in investment strategies, highlighting the significance of climate change and remembering influential market figures.
  • CDMO is Contract Development & Manufacturing organisation. International companies are outsourcing, either contract research or some manufacturing to Indian companies. 
  • Because of the geopolitical situation between America and China, a lot of the work which was going to very large multi-billion dollar Chinese companies, due to geopolitical reasons is shifting. 
  • Now, where can it shift? It is not that it can shift to Mexico or Taiwan. There is no capability there. So it is shifting to India ..
  • CDMO is an organization that serves the pharmaceutical industry and provides clients with comprehensive services from drug development to commercial manufacturing. 
  • Drug lifecycle entails a long-drawn process of discovery and development stages, followed by commercial manufacturing. 
  • This involves high failure probabilities, forcing global pharma companies to outsource (in part or full) drug lifecycle stages to CDMOs. 
  • As per estimates, India’s CDMO market is at ₹18,800cr in 2024, and is expected to grow to ₹37,200cr by 2029, at a CAGR of 14.7
  • The US Biosecure Act intends to prevent Chinese biotech companies and manufacturers from benefiting from US government funding directly and indirectly by prohibiting companies that use manufactured goods or services from certain Chinese companies in particular and those linked to Chinese government / military. The legislation is intended to protect US national security. 
  • Reportedly, the bill has bipartisan support, meaning both major political factions are in support of the bill. While the bill needs to be passed by both the House and the Senate, it is likely to become law.

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