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India’s Contract Research, Development, and Manufacturing Organisation (CRDMO) sector is in a sustained growth phase, supported by consistent global contract wins, new client additions, and expanding manufacturing capacities. The adoption of advanced technologies is boosting operational capabilities and driving valuation re-ratings across the industry. Key domestic players such as Divi’s Labs, Anthem Biosciences, Sai Life Sciences, Piramal Pharma, and Neuland Labs are witnessing strong project inflows across both small-molecule and complex chemistry domains, reflecting deeper engagement from global innovators seeking high-quality, cost-efficient outsourcing partners with strong regulatory track records. The industry’s evolution from pure API manufacturing to fully integrated research-to-commercialisation models is enhancing India’s positioning as a credible alternative to Western and Chinese CRDMOs. According to JM Financial, listed players are expected to deliver a 17% revenue CAGR and 24% EBITDA CAGR over FY25–28E, driven by the scale-up of commercial orders. Cumulative capex across the sector is projected at Rs 150 billion over the next three years, a 37% jump over the preceding period, underscoring investments in capacity expansion and high-value complex product capabilities. Global cost pressures, supply-chain risks, and regulatory complexities are prompting innovators to diversify sourcing beyond single-country hubs. Western CRDMOs are struggling with capacity constraints and margin pressures, while Chinese firms face trade-related challenges and compliance scrutiny, positioning Indian CRDMOs to benefit from shifting outsourcing strategies. Within this landscape, JM Financial identifies Sai Life Sciences, Anthem Biosciences, and Divi’s Labs as best placed to capitalise on sector tailwinds. Sai Life Sciences benefits from broad modality capabilities and global R&D infrastructure, Anthem Biosciences offers a rich commercial portfolio with industry-leading margins, and Divi’s Labs leverages scale and a strong execution pipeline. Piramal Pharma is seeing improving traction in its on-patent portfolio and rising utilisation of overseas facilities, while Neuland Labs remains a differentiated small-cap play in peptide chemistry and capacity-led growth. Commercial pipelines across leading CRDMOs provide strong multi-year visibility. Sai Life Sciences is expected to more than double its CDMO business by FY28, while Divi’s Labs’ pipeline — including over ten major pharma contracts — could add $550 million in sales over FY25-28. Piramal Pharma aims to grow its on-patent portfolio from approximately $150 million in FY25 to over $350 million by FY28, driven by four potential blockbusters. Neuland Labs is the primary API supplier for three potential blockbuster drugs with combined end-product peak sales exceeding $14 billion. Anthem Biosciences has 14 commercial-stage molecules, including nine high-value potential blockbusters with an estimated $38–40 billion peak sales opportunity. Sector benchmarking indicates improving visibility on long-term revenue growth, margin expansion, and strengthening competitive positioning, reflecting the industry’s transformation and scaling of advanced capabilities. JM Financial’s sector analysis highlights pipeline depth and operational execution as key differentiators for sustained outperformance. Its stock preferences include “buy” ratings on Sai Life Sciences (target price: Rs 1,197), Divi’s Labs (Rs 7,699), Piramal Pharma (Rs 313), and Neuland Labs (Rs 19,053), and an “add” rating on Anthem Biosciences (Rs 782).
