Indian contract development and manufacturing organisations (CDMOs) and CRDMOs are poised for improved profitability and healthier credit profiles, driven by a shifting supply chain landscape in the United States. This comes as global pharmaceutical companies increasingly diversify away from China—accelerated by US policy initiatives—leading to enhanced capacity utilisation and a stronger project pipeline for Indian manufacturers, according to an analysis by India Ratings & Research.

The move includes an executive order requiring the US Department of Health and Human Services to maintain a six-month API inventory for 26 critical drugs. This not only reinforces supply chain resilience but also favours Indian CDMOs, particularly those engaged in emerging modalities such as peptides, antibody–drug conjugates, and oligonucleotides.

The so-called China+1 strategy has resulted in a sharp decline in US API imports from China—from USD 15 billion in 2022 to USD 9.7 billion in 2024, and further down to USD 4.5 billion in the first half of 2025—while imports from India rose to over USD 13 billion in 2024. Even modest supplier diversification, given India’s scale, is expected to generate outsized gains in utilisation and returns.

Moreover, CDMOs in India have already recorded approximately 25 percent year-on-year EBITDA growth in FY25. As these firms leverage expanded capacities and scale up operations, EBITDA margins and return ratios are anticipated to strengthen further. Cash conversion remains high, and net leverage for portfolio companies is projected to stay near 1.5× net debt to EBITDA over the near to medium term.

One case in point is Syngene International, a Biocon-backed CRDMO, which reported an 11 percent year-on-year rise in Q1 FY26 revenue to INR 875 crore, with net profit surging 59 percent to INR 87 crore.

As CDMOs continue to secure long-term contracts and embrace technology-led manufacturing, they appear well-positioned to capitalise on the evolving global supply chain environment—favouring India as a preferred manufacturing hub.