India’s CDMO industry set for global shift as pharma diversifies beyond China: Sai Life Sciences

The global contract development and manufacturing organisation (CDMO) industry is witnessing a significant shift as multinational pharmaceutical companies increasingly diversify their manufacturing footprint away from China. With regulatory scrutiny intensifying around Chinese CDMO giant WuXi AppTec, Indian players are emerging as trusted alternatives for global drugmakers.

Speaking to ET Now, Sivaramakrishnan Chittor, CFO of Sai Life Sciences, said the ongoing supply-chain realignment presents a landmark opportunity for India’s CDMO sector, although the benefits are expected to materialise gradually given the regulatory nature of pharmaceutical manufacturing.

India emerges as preferred alternative
Chittor said the transition away from China had begun well before recent regulatory developments and that global pharmaceutical companies had already started engaging with Indian CDMOs.”This is a landmark time for the Indian CDMOs. The genesis of this started two years ago. There was the first report that had come out. Pharma companies had already started moving. There are already a lot of conversations that Indian CDMOs are having with global pharma, and the fact that they have now been included in the 1260H list makes it much clearer for pharma to ensure that they diversify. Today, India is their best bet, and Indian companies are scaling up, putting up capex, and making sure that they can cash in on the opportunity. I believe this is something that is very positive for India. At Sai Life Sciences, we work with 19 out of the top 25 pharma companies, and we are at the forefront of this,” he said.

Growth guidance remains unchanged
Despite the improving opportunity, Sai Life Sciences has maintained its revenue growth guidance of 15-20% CAGR, with management noting that the shift in manufacturing contracts will take time due to regulatory approvals and product transfer timelines.

“There are definitely opportunities for the entire sector to grow bigger. The only thing is the timing. Pharma will take time because these are products with regulatory implications, so they will take a little time to move. They may not show up in the immediate quarter or even the immediate year, but we believe that as pharma settles down and makes its move—which they have already started doing—there are opportunities for us to grow bigger and better,” he said.₹1,300 crore expansion to be funded through accruals and debt
Sai Life Sciences plans to invest between ₹1,100 crore and ₹1,300 crore in capacity expansion by FY27. The company expects to finance the investment through internal accruals and debt while maintaining a comfortable balance sheet.

“The total ₹1,100-1,300 crore will be funded through internal accruals and debt. At this point in time, we have no debt, or only very minuscule debt, on our books. We would be able to fund this through our own internal accruals and the debt the business will need. The capex we announced last year will begin coming on stream by the end of this financial year. While production facilities will become operational, it may take a couple of years to reach optimal capacity utilisation,” he said.

Big Pharma contribution nearly doubles
The company’s revenue mix has shifted significantly over the past four years, with contributions from global pharmaceutical companies rising from 28% to 49%.

According to Chittor, this trend reflects an industry-wide move towards diversification and deeper partnerships with Indian manufacturers.

“Large pharma has been a big part of our growth. Our entire CDMO business today is primarily driven by large pharma. As I said, large pharma has been on this path to diversify over the last two to three years and has not been waiting for this final announcement from the Department of Defence. Pharma companies are moving faster where they already have existing relationships. That is why, whether it is our CDMO or CRO business, pharma’s contribution to our overall revenue has increased over the last two to three years,” he said.

Commercial pipeline continues to strengthen
Sai Life Sciences has also witnessed strong growth in late-stage development projects, with Phase III and pre-registration molecules increasing substantially over the past year.

While the company refrained from providing revenue guidance from newly commercialised molecules, it highlighted growing confidence among global pharmaceutical companies in using India for commercial-scale manufacturing.

“We have not put out a number on the commercial molecules, so I would stay away from putting a number today. What I would like to emphasise is the longer-term pipeline growth. The increase in Phase III molecules is fundamentally a reflection of how pharma is looking at India as a commercial supplier. Earlier, many pharma companies used India primarily for clinical supplies. Now they are moving towards commercial supplies. That is why we had six molecules earlier and now have eleven. The additional molecules are coming from pharma companies that want to manufacture more commercially in India,” he said.

Second half expected to be stronger
The company continues to expect FY27 performance to be weighted towards the second half, supported by new capacity additions and improving order visibility.

“Primarily because some of the capacities that we are bringing in will come in during the second half of this year. Increased capacity, backed by order visibility at that point in time, is what gives us confidence that the second half will be stronger than the first,” he said.

Long-term opportunity for Indian CDMOs
The gradual shift in global pharmaceutical manufacturing appears to be creating a structural opportunity for India’s CDMO industry. While the transition from existing manufacturing partners will take time due to regulatory approvals, Indian companies are investing aggressively in capacity and strengthening relationships with global pharmaceutical innovators.

For Sai Life Sciences, the strategy remains centred on expanding manufacturing capabilities, deepening partnerships with large pharmaceutical companies, and positioning itself to benefit from one of the biggest supply-chain realignments in the global healthcare industry.