Wed Jul 16 03:20:00 UTC 2025: **Summary:**

The Indian Contract Development and Manufacturing Organization (CDMO) sector is experiencing significant growth and investor enthusiasm, contrasting with the underperformance of generic pharma companies. Anthem Biosciences’ IPO success and the surging stock prices of other CDMO players like Divi’s Labs and Piramal Pharma underscore this trend. While the global CDMO market is substantial, India’s current share leaves considerable room for expansion, especially as companies seek to diversify supply chains away from China. Goldman Sachs highlights increasing client engagement through trial contracts as a promising sign.

Despite high valuations, experts believe the CDMO sector’s stronger fundamentals, including higher revenue growth and operating margins compared to generics, justify the premium. However, risks remain, including potential US trade tariffs, the need for consistent strong performance, intellectual property protection, volatile revenue, and longer regulatory timelines in India.

**News Article:**

**Indian CDMO Sector Booms as Anthem Biosciences IPO Sparkles**

**Mumbai:** India’s Contract Development and Manufacturing Organization (CDMO) sector is experiencing a surge in investor interest and growth, driven by factors like supply chain diversification and strong fundamentals. This comes as Bengaluru-based Anthem Biosciences’ recent IPO was subscribed 0.7x overall on Day 1, highlighting the sector’s growing appeal.

Shares of key CDMO players such as Divi’s Laboratories, Aarti Pharmalabs, and Piramal Pharma have seen substantial gains over the past year, significantly outperforming generic pharma companies. The global CDMO market presents a substantial opportunity for Indian companies, with current market share leaving significant room for expansion.

Analysts at Goldman Sachs point to an increase in requests for quotations (RFQs) converting into pilot contracts for companies like Syngene and Divi’s, signaling rising client engagement. This is being fueled by companies looking to reduce reliance on China, a trend expected to continue over the next 3-5 years.

While the sector boasts higher revenue growth and operating margins compared to generic pharma, experts caution about high valuations and potential risks. Concerns include the possibility of US trade tariffs, the need for consistent performance, challenges in protecting intellectual property, and longer regulatory timelines in India. Despite these risks, the Indian CDMO space is positioned as a long-term outperformer due to stronger fundamentals than traditional generics.

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