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China’s loss is India’s gain as Western drug makers pivot – despite quality, oversight concerns

  • China has for years been the preferred location for a range of pharmaceutical research and manufacturing services due to its low cost and speed
  • India is seeking a bigger foothold in the pharmaceutical services sector to boost sales and reputation for its US$42 billion industry

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Medicine pills. Some biotech companies say they are looking at using manufacturers in India to produce active pharmaceutical ingredients for clinical trials or other outsourced work. Photo: Reuters
Reuters
Drug makers are seeking to limit their reliance on Chinese contractors who produce drugs used in clinical trials and early-stage manufacturing, a move that is benefiting rivals in India, according to interviews with 10 industry executives and experts.
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China has for nearly 20 years been the preferred location for a range of pharmaceutical research and manufacturing services due to the low cost and speed offered by contract drug makers there.
That relationship largely held firm despite a US-China trade war under former US president Donald Trump and supply chain havoc experienced by other industries during the Covid-19 pandemic. But increasing tensions with China have prompted more Western governments to recommend that companies “de-risk” supply chains from exposure to the Asian superpower.
A view inside Indian contract development and manufacturing organisation (CDMO) Sai Life Sciences’ manufacturing facility in Bindar, India’s Karnataka state. Photo: Sai Life Sciences Limited via Reuters
A view inside Indian contract development and manufacturing organisation (CDMO) Sai Life Sciences’ manufacturing facility in Bindar, India’s Karnataka state. Photo: Sai Life Sciences Limited via Reuters

That is leading some biotech companies to consider using manufacturers in India to produce active pharmaceutical ingredients for clinical trials or other outsourced work.

“Today you’re probably not sending an RFP (request for proposal) to a Chinese company,” said Tommy Erdei, global co-head of healthcare investment banking at Jefferies. “It’s like, ‘I don’t want to know, it doesn’t matter if they can do it for cheaper, I’m not going to start putting my product into China’.”

Dr Ashish Nimgaonkar, the founder of Glyscend Therapeutics, a US-based biotech firm testing treatments for type 2 diabetes and obesity in early trials, agreed. “All of the factors over the past several years have made China a less attractive option for us,” he said.

Nimgaonkar said that when Glyscend issues an RFP later in the development stage of the medicines it has in trials, Indian contract development and manufacturing organisations (CDMOs) would be preferred over Chinese ones.

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