The US Biosecure Act presents a significant opportunity for Indian pharmaceutical companies, particularly in the Contract Research Organization (CRO) and Contract Development and Manufacturing Organization (CDMO) sectors. Sibaji Biswas, Executive Director and CFO of Syngene International, is optimistic about the prospects for these sectors in India over the next four to five years. The Act has prompted larger multinational corporations to diversify their supplier bases, leading to increased interest in Indian companies from big pharma. This trend is expected to gradually unfold, creating substantial opportunities for Indian pharmaceutical firms.
The introduction of the US Biosecure Act has led to a cautious yet growing interest from large multinational corporations in diversifying their supply chains. This has translated into a rising interest in Indian companies, particularly those in the CRO and CDMO spaces. According to industry experts, this shift is not an immediate one; instead, it is expected to develop over several years as multinational companies explore their options and gradually expand collaborations with Indian firms.
Laurus Labs, a prominent player in the Indian pharmaceutical industry, has already observed the beginnings of vendor diversification as a result of the Biosecure Act. The company has reported an increase in late-phase project requests, indicating that big pharma is starting to consider Indian firms for more critical aspects of their supply chains. However, Dr. Chava, a representative of Laurus Labs, notes that this transition is likely to be slow, with companies initially handing over smaller projects and gradually increasing their engagement as trust and collaboration deepen.
Piramal Pharma is another Indian company experiencing increased exploratory discussions with multinational corporations. The company has seen a surge in inquiries, customer visits, audits, and requests for proposals, although no significant decisions have been made yet. This cautious approach by multinational corporations highlights the careful consideration being given to the selection of new suppliers, as they evaluate the capabilities and reliability of Indian firms.
Neuland Labs, primarily an Active Pharmaceutical Ingredient (API) company, has also been engaging in more discussions and meetings with US firms. However, the company has yet to see a substantial increase in active requests for proposals or orders. Despite this, Neuland remains optimistic about the medium to long-term prospects, recognizing the favorable environment created by the US Biosecure Act. It is important to note that Neuland’s focus on APIs differs from the clinical or biologically focused CDMOs, which may explain the current lack of immediate impact.
Syngene International appears to be at the forefront of this shift, likely due to its existing long-term contracts with multinational corporations. Analysts have pointed out that Syngene is gaining traction faster than some of its peers, as big pharma companies adjust their sourcing strategies to mitigate risks. Jonathan Hunt, CEO of Syngene, has observed a significant change in how big pharma approaches sourcing, driven by the need to diversify and reduce reliance on any single region, such as China.
Syngene has been actively participating in pilot projects related to the so-called ‘China switch’ opportunity. This strategic shift has resulted in a 50% year-over-year increase in Requests for Proposals (RFPs) in terms of value during the first quarter, marking Syngene’s best performance in four years. This uptick in interest reflects the growing recognition of Indian CROs and CDMOs as viable alternatives to traditional suppliers, particularly in the context of the Biosecure Act.
While Indian pharmaceutical companies are poised to capitalize on the opportunities presented by the US Biosecure Act, they face several challenges. Experts highlight that Indian firms lag behind their global peers in areas such as experience, trust, technology, and large-molecule capacity. To compete effectively with US and European companies, Indian firms need to enhance their capabilities, invest in technology, and expand their capacity.
Big pharma companies, with their deeper financial resources, are expected to move more quickly in exploring India as an alternative supplier compared to emerging biotech firms. Although the timeline for implementing the Biosecure Act has reduced the immediate urgency for alternatives, the overall trend remains favorable for Indian CROs and CDMOs in the long term.
Vishal Manchanda, a Pharma Analyst at Systematix Group, believes that several Indian companies are well-positioned to benefit from the opportunities created by the US Biosecure Act. These include Divi’s Laboratories, Suven Life Sciences, Aarti Pharmalabs, and Syngene International. These companies are expected to see increased interest from big pharma as the industry continues to diversify its supply chains in response to the Biosecure Act.
Conclusion
The US Biosecure Act represents a tangible opportunity for Indian pharmaceutical companies, particularly those in the CRO and CDMO sectors. While the shift towards Indian suppliers is expected to be gradual, the long-term prospects are promising. Companies like Syngene International, Laurus Labs, Piramal Pharma, and Neuland Labs are already experiencing increased engagement from multinational corporations. However, to fully capitalize on these opportunities, Indian firms must address the challenges they face in terms of experience, technology, and capacity. As the global pharmaceutical landscape continues to evolve, Indian companies have the potential to play a more significant role in the industry, driven by the changes prompted by the US Biosecure Act.