India Contract Manufacturing Organization (CMO) Market Outlook to 2028

India Contract Manufacturing Organization (CMO) Market Overview

• The India Contract Manufacturing Organization (CMO) market is valued at INR 1,200 billion, driven by the rising demand for generic pharmaceuticals and the robust growth of the biotechnology sector. This growth is also supported by favorable government policies encouraging foreign direct investment (FDI) in the healthcare and pharmaceutical industries. Additionally, India's cost-effective manufacturing capabilities, coupled with a highly skilled workforce, make it a key player in the global CMO market.
• In terms of regional dominance, key cities such as Hyderabad, Bengaluru, and Mumbai lead the Indian CMO market due to their well-established pharmaceutical manufacturing infrastructure and strong talent pools. These cities are home to several major pharmaceutical companies and have seen significant investment in R&D and biopharmaceutical production, contributing to their dominant position in the industry.

• Indian CMOs must comply with stringent drug manufacturing regulations to ensure product quality. In 2022, the CDSCO updated its Good Manufacturing Practices (GMP) guidelines, requiring pharmaceutical companies to adhere to higher standards of quality control. Over 1,000 companies underwent inspections, ensuring compliance with national and international standards. These regulations have helped Indian CMOs maintain a strong reputation for producing high-quality drugs.

India Contract Manufacturing Organization (CMO) Market Segmentation

By Product Type:The India CMO market is segmented by product type into Active Pharmaceutical Ingredients (APIs), Finished Dosage Forms (FDFs), Biologics, and Custom Manufacturing. APIs currently hold the largest market share, primarily due to India's leadership in generic drug production and its cost-efficient manufacturing capabilities. This dominance is supported by India's large-scale production facilities and expertise in synthesizing complex molecules, which allows local manufacturers to supply APIs to both domestic and international markets.

By Service Type: The market is also segmented by service type, which includes Drug Development and Formulation, Analytical Services, Packaging and Labeling, and Clinical Manufacturing. Drug Development and Formulation dominate the market, as Indian CMOs have increasingly invested in R&D capabilities to offer comprehensive services to global pharmaceutical companies. This includes expertise in complex formulations, allowing Indian firms to serve a growing number of clients looking for end-to-end solutions from development to commercialization.

India Contract Manufacturing Organization (CMO) Market Competitive Landscape

The Indian CMO market is dominated by several major players who have established themselves as leaders through extensive service portfolios, global partnerships, and robust manufacturing capabilities. These companies are continuously expanding their service offerings to meet the increasing demand for contract manufacturing from both domestic and international pharmaceutical companies. The India CMO market is characterized by a few key players who have a significant influence on the market, including Cipla, Sun Pharma, and Biocon. These firms have leveraged their R&D capabilities, manufacturing infrastructure, and strategic partnerships to strengthen their market position.

India Contract Manufacturing Organization (CMO) Market Analysis

Growth Drivers

• Rising Demand for Generic Drugs: India is one of the largest suppliers of generic drugs globally, with around 20% of the world's generic medicines manufactured in the country. In 2023, generic drug exports from India reached USD 18.1 billion. The increasing healthcare demand worldwide, especially in developing nations, has led to a rise in outsourcing to Indian CMOs for the production of high-quality yet affordable generic drugs. This growth is supported by Indias extensive production base, skilled labor, and cost-effective manufacturing processes.
• FDI Policies Favoring Contract Manufacturing: India's government has implemented policies that attract Foreign Direct Investment (FDI) in the pharmaceutical sector, including 100% automatic approval in greenfield projects. In 2022, the pharmaceutical sector attracted FDI inflows worth USD 1.8 billion. This has encouraged international pharmaceutical companies to partner with Indian CMOs, providing a significant boost to contract manufacturing. FDI inflows help develop local manufacturing capacities and expand technological advancements in production, making India an attractive hub for outsourcing.
• Regulatory Approvals Streamlining: India has simplified its drug approval process to encourage contract manufacturing. The Central Drugs Standard Control Organization (CDSCO) has implemented faster regulatory pathways for drug approvals. In 2022, over 1,100 drugs received manufacturing approval, enabling CMOs to scale production quickly. Streamlined approvals and strong regulatory compliance have significantly contributed to the efficiency and growth of contract manufacturing in India, making it a favorable destination for global pharmaceutical companies.

Market Challenges

• Supply Chain Disruptions: Supply chain disruptions due to global geopolitical tensions and COVID-19 lockdowns have affected the pharmaceutical sector, causing delays in raw material supply. India relies heavily on imports of Active Pharmaceutical Ingredients (APIs), with approximately 68% sourced from China as of 2023. These disruptions have created challenges for Indian CMOs, leading to production delays and increased costs. The governments emphasis on boosting domestic API production through schemes like the PLI for Bulk Drugs aims to mitigate these risks.
• Strict Regulatory Requirements: While India is a preferred destination for contract manufacturing, navigating the regulatory frameworks of different countries remains a challenge. Indian CMOs face stringent international regulations, particularly from the US FDA and the European Medicines Agency. In 2022, around 42 Indian pharmaceutical companies faced FDA warnings, highlighting the complexity of adhering to global standards. This presents an ongoing challenge for Indian CMOs in maintaining compliance while scaling operations.

India Contract Manufacturing Organization (CMO) Market Future Outlook

Over the next five years, the India Contract Manufacturing Organization (CMO) market is expected to experience substantial growth, driven by increased outsourcing from global pharmaceutical companies, the rising demand for biologics and biosimilars, and favorable government policies that support pharmaceutical manufacturing. The expansion of manufacturing capacities, particularly for biopharmaceuticals, and the increasing focus on digital transformation and automation in production processes will also contribute to this growth.

Market Opportunities

• Expansion into Biologics Manufacturing: The growing global demand for biologics presents a significant opportunity for Indian CMOs to expand their services. As of 2023, biologics accounted for nearly 30% of global pharmaceutical revenues, with many large pharma companies looking to outsource their production. Indias burgeoning biopharmaceutical sector has received USD 200 million in government incentives through the PLI Scheme, encouraging local manufacturing of biologics and biosimilars. This expansion provides Indian CMOs with a pathway to enter higher-value manufacturing.
• Integration of Advanced Manufacturing Technologies: The integration of advanced technologies like artificial intelligence (AI), machine learning (ML), and automation is transforming the pharmaceutical manufacturing landscape. In 2024, India has seen increased adoption of digital manufacturing technologies, particularly among large CMOs. Government-backed initiatives such as the Digital India program have encouraged the use of smart manufacturing technologies. These advancements enhance production efficiency and reduce human error, providing Indian CMOs with a competitive edge.