With global pharmaceutical giants seeking reliable and cost-effective partners, India’s CRDMO sector is gaining momentum as a preferred destination for end-to-end drug research, development, and manufacturing services.
India’s contract research, development, and manufacturing organisation (CRDMO) sector, a key partner to global pharmaceutical companies, is expected to rise 13-15 per cent in revenues in the current fiscal year, about 2 per cent higher than the FY2025 estimated growth, even as global supply chains diversify amidst growing geopolitical uncertainties.
The CRDMO sector, which specialises in researching the chemistry of small molecules and developing and manufacturing them, is likely to maintain strong operating margins of 26-28 per cent. According to a Crisil Ratings report, these healthy margins will translate into strong cashflows, allowing companies to continue capital expenditures with minimal reliance on debt and thereby sustaining their robust credit profiles.
Growing dependence on CRDMOs for the production of complex intermediates and active pharmaceutical ingredients (APIs), particularly from the US, the world’s largest pharmaceutical market, positions Indian players well to absorb any potential tariffs imposed by the US government. The sector’s critical role in supporting healthcare infrastructure further underpins its resilience.
An analysis of 19 Indian CRDMOs, collectively contributing nearly 50 per cent of the sector’s estimated revenue of ₹70,000 crore in the last fiscal year, underlines this optimistic outlook.
Globally, India currently commands less than 5 per cent of the CRDMO market, which the we, Europe and China still dominate. The segment is broadly split between contract development and manufacturing organisations (CDMOs), contributing ~55 per cent of revenue through drug development, clinical trial stage services and commercial manufacturing, and contract research organisations (CROs), which drive ~45 per cent of revenue through early-stage drug discovery and research services.
Crisil Ratings Director Aditya Jhaver notes, “The domestic CRDMO sector will continue to outpace the high single-digit growth seen globally. Many US and European pharma majors are exploring alternatives to China to diversify supply chains, reduce risk, and ensure continuity. India’s deep expertise in small molecule chemistry, extensive USFDA-approved manufacturing base, and competitive cost structure in R&D and manufacturing gives it a distinct advantage.”
Domestic CDMO revenues are projected to grow 14-16 per cent this fiscal, up from an estimated 13 per cent in fiscal 2025, driven by new orders and rising global enquiries, a sign of growing trust in Indian firms’ capabilities. Meanwhile, CRO revenues are expected to expand by 11-13 per cent, up from 9 per cent last year, though this growth hinges on a recovery in venture capital investments, which remain sensitive to global uncertainties.
The double-digit growth across segments, combined with a focus on complex, high-margin products, will continue to support profitability and expansion plans. As per the Crisil report, the sector is expected to maintain low reliance on incremental debt, thanks to steady internal accruals and capital support from private equity players or public markets. Key credit metrics are forecast to stay healthy, with debt-to-EBITDA at 1.3-1.4x and interest coverage at 9-10x for this fiscal.
Joanne Gonsalves, Associate Director, Crisil Ratings, adds, “Indian CRDMOs will continue to ramp up manufacturing and technical capabilities, creating room for further growth. The financial outlook remains strong with strategic investments funded through robust cashflows rather than borrowing.”
While regulatory risks, especially from the US, remain a factor, the overall credit health of Indian CRDMOs is expected to stay strong. Long-term scalability, particularly in large molecule manufacturing, will depend on continuous talent upskilling and technological enhancement. Furthermore, if the proposed Biosecure Act is enacted in the US, Indian CRDMOs benefit from increased outsourcing opportunities, further boosting revenue and cash flows.
