Brokerage firm Macquarie, reiterating its ‘Outperform’ rating on the CDMO names under its coverage, said the Biosecure Act is likely to be enacted by the end of 2025.
Macquarie expects the legislation to accelerate growth for Indian CDMOs, estimating high-teens CAGR over the next five years compared with low-teens growth in the previous five.It added that Indian players are well positioned to benefit from additional small-molecule CDMO opportunities, though revenue and earnings from projects arising due to the Act will only start contributing after a 12-24 month lag.
Macquarie Capital told CNBC-TV18 that CDMO companies are unlikely to see any meaningful earnings boost over the next year, even though the underlying business in India is poised for high-teens growth.It estimates the domestic CDMO market could expand to $20 billion by 2030, up from about $7 billion now.
Within the sector, Macquarie’s preferred picks are Divi’s Labs and Syngene.
In an interaction with CNBC-TV18, Siva Chittor, CFO of Sai Life Sciences, dismissed concerns that the legislation had been diluted and said the Biosecure Act remains clearly positive for Indian CDMO companies.
He said companies that had been waiting for final clarity are now preparing to act on the legislation and are engaged in major strategic discussions.
Chittor expects Indian CDMOs to deliver stronger performance in the coming years, adding that pharma accounts for 90% of Sai Life Sciences’ overall business.
