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Recent acquisitions in the pharma space point at the renewed investor interest for CDMOs (Contract Development and Manufacturing Organisations), eyeing future global opportunities arising from several molecules going off-patent in the next three to five years.
Most recently, cement-to-FMCG player Nirma Group has reportedly acquired Stericon Pharma Pvt Ltd — a Bengaluru-based CDMO engaged in the manufacturing of eyedrops and contact lens cleaning solutions. The announcement came from a leading healthcare venture finance player, InvAscent, that exited from the company.
Last month, fabricated metal products maker Tube Investments of India (TII) — part of the diversified Murugappa Group — had announced to set up a subsidiary for contract development and manufacturing and active pharmaceutical ingredients (API) businesses. One more deal was sealed in December last year when private equity firm Advent International bought 50.1 per cent stake in Hyderabad-based Suven Pharmaceuticals for ₹6,313 crore with its plans to merge its portfolio company, Cohance Lifesciences, with Suven, to build an end-to-end CDMO.
Read also: Developing on the pharma success story
Clearly, there is an opportunity for investors looking for global prospects. Speaking to businessline, Viranchi Shah, National President, Indian Drug Manufacturers’ Association (IDMA), said, “India’s strength in CDMO is well-recognised. The cost of development and manufacturing is a fraction of what is seen in developed markets. Also, in the past few years, most of the plants are modernised to get qualified for certifications of developed markets. The cost advantage coupled with quality improvement has drawn global attention towards India.”
More opportunities
There is an emerging opportunity in the de-risk strategy of global buyers after facing supply disruptions from China during Covid-19.
“Emerging global opportunities are products and molecules worth about $200 billion that are getting off-patent in the coming years. India has an inherent strength to develop a product that has gone off-patent and make a bioequivalent at the fraction of the cost at which it was sold by the innovators. This will be a big push for the CDMOs, and possibly a driver for these investments,” said Shah.
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