Contract Manufacturing in India: Is the CMO Model a Viable Business?

Indian biologics manufacturers can tap into the global biologics market by enhancing their quality image and maintaining cost competitiveness.
Nov 01, 2008
Volume 21, Issue 11

Increased competition, patent expirations, and dwindling new-product offerings have put pressure on companies to offload risks by outsourcing. This trend has benefitted established contract manufacturing organizations (CMOs) globally. But for emerging India-based biopharmaceutical manufacturers, the short-term outlook remains a question. As we argue in our report, Advances in Biopharmaceutical Technology in India, the country is still widely perceived as having problems that may hinder future growth in outsourced biologics manufacturing.1

Eric Langer
Although the Indian biopharmaceutical industry has demonstrated its competence in several technical and manufacturing areas such as bioinformatics, small-molecule generics, R&D and drug discovery, and clinical research, industry observers question how India will position itself to offer CMO services. To be successful, CMOs must offer high quality technical know-how, process development competence, and lower cost manufacturing processes.


India's expertise in biopharmaceuticals dates back to 1925, when Haffkine Institute (Mumbai) began producing vaccines. Today, Haffkine's biopharmaceutical group ranks 37th in our Top 60 Biopharmaceutical Manufacturers in India.2 Until recently, India has been highly dependent on foreign companies to meet the country's growing demand for basic medication. Biocon (#1 in our India biopharmaceutical ranking report), began to change that in 1978, when it became the first Indian company to manufacture and export enzymes to the US and Europe. India is now the largest producer of recombinant hepatitis B vaccine. Serum Institute (ranked #2) claims that one of every two children in the world is vaccinated by their vaccine. Although most major Indian biopharmaceutical companies today are focused on vaccines, the domestic recombinant therapeutic proteins segment is beginning to make progress as well. Today, as they prove quality and cost effectiveness, these companies are beginning to tap into the global markets for a broader array of biologics. The current focus is on obtaining a share of the underdeveloped market and supplying to the World Health Organization (WHO) and other nongovernmental organizations.


CMOs that make small-molecule products have definitely been enjoying a boom. From 2004 to 2005, the global pharmaceutical contract manufacturing industry doubled, from about $12 billion to $25 billion.3 By 2006, it had expanded by another 50% to about $35 billion.4

Biopharmaceutical contract manufacturing has tougher requirements for technology, human capital, and regulatory aptitude. In recent years, there have also been signs of adequate capacity, and would-be newcomers to the business have faced significant barriers to dislodge existing players.5,6 The potentially expansive market for biosimilars has yet to take off because the US and Europe have been slow in issuing guidelines in this area.

Despite all this, growth of biopharmaceutical contract manufacturing has been fairly robust at about 25% annually.7 And as Figure 1 makes clear, there is going to be the need for outsourcing capacity at CMOs. Some of that may well be directed toward India.8

Figure 1
According to this year's survey data, 60.4% of biotherapeutic developers plan to outsource at least some production in mammalian cell culture by 2012. Microbial fermentation will be outsourced by 47.6% of biotherapeutic developers by 2012. The fact that manufacturers using mammalian systems have not significantly changed their five-year projection this year suggests a relatively stable production environment.

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