2024-08-01

India's journey in the Contract Research and Manufacturing Services (CRAMS) industry began in the early 1980s, drawing multinational pharmaceutical companies seeking cost-effective research and manufacturing solutions. Over the years, India has become a leading destination for outsourced pharmaceutical services, providing a wide range of capabilities across the drug development and manufacturing value chain. This sector has seen steady growth due to increasing demand for outsourcing services from global pharmaceutical companies, growing investments in R&D, and a shift towards specialized services.

Key Advantages of India's CRAMS Industry

Skilled Scientific Talent

India boasts a large pool of skilled scientific professionals. The availability of highly trained scientific and technical professionals is a significant advantage, allowing India to offer comprehensive research and development services across the pharmaceutical value chain.

Robust Regulatory Framework

The country has a strong regulatory framework ensuring quality and compliance. The Central Drugs Standard Control Organization (CDSCO) and other regulatory bodies such as the Department of Biotechnology (DBT), Indian Council of Medical Research (ICMR), and the Ministry of Health and Family Welfare play pivotal roles in overseeing and ensuring the adherence to stringent regulations, thereby enhancing the credibility of Indian CRAMS players on a global scale.

Cost Competitiveness

India offers cost-effective solutions compared to other markets. Manufacturing labor costs in India are significantly lower than in other regions, with costs in 2022 being 35% of those in China. This cost advantage attracts multinational companies to outsource their manufacturing and research activities to India.

Favorable Business Environment

A supportive business environment fosters growth. India's policies, such as the Production Linked Incentive (PLI) schemes and the Promote Research in Pharma (PRIP) scheme, encourage investment in innovative research and development, thereby supporting the growth of the CRAMS sector.

Trends and Opportunities

Market Overview

The CRAMS market in India is valued at approximately USD 21 billion in 2023, making up about 20% of the overall APAC market. The market is expected to grow at a CAGR of around 10% from 2023 to 2028, driven by the rising demand for generics, increasing healthcare awareness, and a large base of patients with acute and chronic diseases.

Market Segmentation

The Indian CRAMS market comprises two major segments: Contract Research Organizations (CRO) and Contract Development and Manufacturing Organizations (CDMO). Approximately 75% of the CDMO market belongs to contract manufacturing services, with the remaining 25% dedicated to research and development services.

Key Services

• Contract Research Organization (CRO): Provides support in the form of research services, including drug discovery, pre-clinical trials, specimen development, and clinical trials.
• Contract Development and Manufacturing Organizations (CDMO): Offers services such as drug development, manufacturing, packaging, analytical and quality control services, commercial production, and supply chain services.

Growth Drivers

1. Rising Demand for Generics: Increasing awareness and demand for generic drugs is a significant growth driver. The Indian market's ability to produce cost-effective generics caters to a global demand, particularly in markets with stringent regulatory requirements.
2. Government Initiatives: Policies such as the Production Linked Incentive (PLI) schemes, adherence to Good Manufacturing Practices (GMP), and the Promote Research in Pharma (PRIP) scheme support the sector, particularly in innovative research areas.
3. Provision of End-to-End Services: CDMOs continue to expand their capabilities across all phases of development and commercialization, offering integrated services that cover the entire product lifecycle.
4. Technological Advancements: Adoption of advanced technologies and automation in drug discovery, formulation development, and manufacturing processes by Indian CRAMS providers has enhanced efficiency, reduced time-to-market, and improved quality.
5. Rising Exports: Growth in formulation export markets aids the CDMO segment in India, as many companies outsource their development and manufacturing activities to meet export demands.

Market Barriers

1. Rising Competition Among Small Players: High competition leads to price wars, lowering the bargaining power of smaller players. Smaller players often set market price references, intensifying price competition.
2. Infrastructure and Technological Limitations: Only a few players in the highly fragmented Indian CDMO industry possess requisite drug research and development capabilities. Additionally, very few CDMOs have the necessary specialized teams and rapid prototyping capabilities.
3. Regulatory Challenges: CRAMS players must remain compliant with evolving regulations. They face various regulatory risks, such as government-imposed price ceilings.
4. Data Integrity Concerns: Concerns about the leakage of sensitive information to competitors remain a top concern for pharmaceutical companies. This reluctance to outsource research and manufacturing processes stems from data security concerns.

Recent Developments

Industry Consolidation

Consolidation is gaining traction, with CDMOs providing comprehensive end-to-end services at limited costs. Recent examples of consolidation include:

• Akums acquired one of Ankur Drugs’ production plants to boost production capacities of oral tablets and liquids.
• Syngene International acquired a multi-modal biologic manufacturing facility from Stelis Biopharma for approximately USD 75 million.

Expansion and Capacity Building

CDMOs are making strategic investments in R&D and manufacturing facilities to enhance their capabilities. Examples include:

• Aurigene Pharmaceutical Services, a CDMO unit of Dr. Reddy’s Laboratories, is setting up a production facility in Genome Valley, Hyderabad, with an investment of USD 40 million.
• Laurus Labs invested INR 1.6K crore during 2020–2021 and plans to invest INR 2.4K crore over 2023 and 2024 to expand its footprint across the country.

Operational Enhancement

Investments in operational capabilities to cater to emerging products with the latest technologies are on the rise. For example, nano technology for drug delivery is emerging as a new solution for cardiovascular disease treatment.

AI in Drug Discovery and Development

Large CROs are leveraging AI tools for virtual screening, lead optimization, prediction of drug-target interactions, and identification of novel drug candidates. Examples include:

• IQVIA’s AI-based NextGen smart trial platform to streamline and track clinical trial communications.
• Syngene International’s proprietary solutions for AI-based drug discovery programs.

Emergence of Biopharma Outsourcing

Indian CDMOs are expanding their capabilities to meet the growing demand from biopharma companies. Examples include:

• Enzene Biosciences, a biopharma company that offers integrated CDMO services for biologics, recently inaugurated an R&D facility in Pune.
• Aragen is constructing a biologic manufacturing plant in Bengaluru, involving an investment of USD 30 million.

Market Opportunities

The biopharma sector presents significant opportunities due to the low tendency to switch biopharma clients. India is a key player in API CDMO services, with cost-effective manufacturing capabilities and a sizeable labor pool of highly trained professionals.

Strengths

• Generic API Development: Generic versions of off-patent drugs can be developed using generic APIs.
• Cost-Effective Manufacturing: India's manufacturing facilities are cost-effective, providing a competitive edge in the global market.
• Trained Professionals: The availability of a large pool of highly trained scientific and technical professionals is a significant strength.

Opportunities

• API Manufacturing: Development of API manufacturing enables the growth of CDMO players catering to this segment.
• Biosimilars Market: The India Biosimilars market size was valued at USD 349 million in 2022 and is estimated to grow at a CAGR of approximately 25% to reach USD 2.1 billion by 2030.

Regulatory Framework

CRAMS players in India deal with multiple regulatory bodies depending on their product portfolio, including:

• Ministry of Health and Family Welfare
• Central Drugs Standard Control Organization (CDSCO)
• Indian Council of Medical Research (ICMR)
• Department of Biotechnology (DBT)
• Pharmaceutical Export Council (Pharmexcil)
• Controller General of Patents

Compliance with regulations such as GMP is crucial for CRAMS operations. The regulatory framework ensures quality control, validation of test protocols, and coordination with state and city authorities.

Conclusion

The Indian CRAMS industry is poised for significant growth, driven by factors such as increasing outsourcing trends among pharmaceutical companies, complex drug development programs, and cost-effective manufacturing solutions. To capitalize on these opportunities, Indian CRAMS companies are focusing on enhancing their capabilities, investing in innovation, and strengthening their global presence to maintain a competitive edge in the evolving pharmaceutical landscape.