India's Pharma Boom: Reaping Rewards from the China+1 Strategy

Indian pharmaceutical and biotech industries are gaining a competitive edge as they start to experience tangible benefits from the global shift away from China. According to a recent Goldman Sachs report, signs of the 'China+1' strategy are becoming evident, with some firms reporting that initial interest and Requests for Quotations (RFQs) have progressed into pilot projects and small contracts.

The 'China Plus One' strategy involves companies diversifying their manufacturing and supply chains into countries beyond China while retaining a foothold there. The report, compiled following the '2nd annual India CRO/CDMO trip' in Bangalore and Hyderabad, underlines a surge in RFQs from global clients seeking alternatives to China-centric supply chains.

Nevertheless, Goldman Sachs cautions that while the surge in RFQs suggests movement, the large-scale financial windfalls from these shifts may take three to five years to materialize. Companies such as Syngene, Neuland, and Divi's have noted that some RFQs are being converted into actionable projects, though substantial financial benefits remain in the future.

The report also touches on the United States' BIOSECURE Act, an evolving policy aimed at reducing American reliance on Chinese biotech suppliers. Although investor focus on the Act is currently limited, companies are strategically planning for reduced dependence on China.

Leading the charge are major pharmaceutical and biotech firms that can afford the costs associated with switching suppliers. Meanwhile, smaller companies in the U.S. and Europe remain hesitant, constrained by funding and the capital-intensive nature of moving suppliers. Despite limited updates, firms are actively preparing strategies for a future with diversified sourcing.

(With inputs from agencies.)