Biosecure Act Tailwind: Why India’s CDMO Pharma Players Are Back in Focus?

India’s Contract Development and Manufacturing Organisation (CDMO) sector is once again gaining strong investor attention, supported by global supply-chain diversification, competitive cost structures, and favourable policy momentum. As the US moves ahead with the Biosecure Act, companies with higher CDMO revenue contributions are witnessing a renewed rerating, reflected in short-term and year-to-date gains across leading players.

CDMO Stocks Show Renewed Momentum

Several Indian CDMO focused companies such as Sai Life Sciences, Jubilant Pharmova, Laurus Labs, Neuland Labs, Divi’s Labs, and Akums Drugs have shown positive price traction in recent days. Many of these stocks have delivered robust six-month and YTD returns, supported by strong CDMO order flows and improving visibility on long-term outsourcing demand.

The table highlights how CDMO-exposed companies are responding to sector optimism, with names like Laurus Labs and Divi’s Labs showing consistent multi-year CAGR growth.

Global Pharma Diversification Boosts India’s CDMO Attractiveness

A key structural driver for the industry is the ongoing China+1 strategy, under which global pharmaceutical companies are actively reducing concentration risk by shifting parts of their supply chain outside China. India has emerged as a major beneficiary due to:

• Strong chemistry and process development capabilities
• Regulatory compliance track record across USFDA and EU agencies
• Competitive cost advantages
• Established manufacturing scale across APIs, intermediates, and formulations

On average, Indian CDMOs operate at nearly 20% lower cost than Chinese manufacturers, while maintaining superior compliance for regulated markets such as the US and EU. This makes India both a cost-efficient and reliable partner for global innovators.

Biosecure Act: A Major Tailwind for India

The recently passed Biosecure Act in the United States aims to reduce dependencies on “foreign adversary” nations for critical pharmaceutical and biotechnology inputs. As American companies increase scrutiny of their supply chains, India stands out as the most scalable, trusted alternative for outsourcing.

This shift is expected to accelerate:

• New CDMO contract wins
• Longer-term supply agreements
• Capacity expansion across small-molecule and biologics segments

Indian CDMO Industry Entering a Multi-Year Growth Phase

Industry estimates indicate that the global CDMO market is entering a multi-year expansion cycle, driven by:

• Rising R&D outsourcing
• Emerging biologics and complex generics
• Increased demand for flexible, scalable manufacturing
• Rising global drug development intensity

India is projected to grow faster than the global CDMO average, owing to its end-to-end capabilities across:

• APIs
• Intermediates
• Complex formulations and injectables

Long-Term Outlook: Structural Rerating on the Cards

While near-term earnings may be volatile due to product mix and regulatory cycles, the long-term visibility for Indian CDMOs remains strong. The combination of:

• Capacity expansions
• Improving operating leverage
• Sticky global clients
• Strong order-book momentum
• Policy support from major markets

…positions the sector for sustained growth and margin improvement.

As global pharma continues to seek reliable, cost-efficient partners, Indian CDMO companies appear well placed for a potential structural rerating over the next several years.