India's CRDMO sector could gain USD 700 million annually from China+1 shift: Jefferies

New Delhi [India], June 11 (ANI): Indian contract research, development and manufacturing organisations (CRDMOs) could gain about USD 700 million in annual revenue from the ongoing China+1 supply-chain shift, with the US BIOSECURE Act emerging as a key catalyst, according to a Jefferies report.
"We believe China+1 is a ~USD700m/yr incremental revenue opportunity for Indian CRDMO firms", the report noted.
The brokerage said the opportunity has intensified after Chinese pharmaceutical services company WuXi AppTec was added to the US Department of Defence's Section 1260H list, which can trigger BIOSECURE-related restrictions on federal contracting.
"WuXi AppTec's addition to US DoD's 1260H list triggers Biosecure restriction, which includes a ban on new US federal contracts," Jefferies said. It added that although implementation could take "12-24 months (JEFe)", the development "creates a massive opportunity for Indian CRDMOs."
Jefferies estimates that Indian CRDMOs collectively generated roughly USD 3-3.5 billion in FY26 sales, compared with WuXi AppTec's USD 6.3 billion in CY25, indicating substantial headroom for market-share gains.
The report explained that the BIOSECURE Act, enacted as part of the FY2026 National Defense Authorization Act, permanently restricts federal agencies from procuring biotechnology equipment or services from designated "biotechnology companies of concern" and also prevents businesses, universities and institutions from using federal grants, loans or contract funds to work with those entities.
"The earliest binding contracting restrictions will legally materialize between late 2027 and 2028," Jefferies said, pointing to the statute's phased implementation process involving the Office of Management and Budget and the Federal Acquisition Regulatory Council.
On the industry impact, Jefferies said the shift should disproportionately benefit Indian companies with strong small-molecule and peptide capabilities.
"We believe the addition of Chinese CRDMO names like Wuxi Apptec creates a significant opportunity for Indian CRDMO firms especially in the small-molecule and peptide space," the report said.
The brokerage identified Divi's Laboratories, Laurus Labs and Sai Life Sciences as key beneficiaries because of their "strong track record in small molecules, peptide project pipeline, expanding capacities and strong relationships with Big Pharma."
Jefferies further estimates that the China+1 transition could add about USD 2.4 billion of incremental sales to Indian CRDMOs over the next four years and help the industry grow at an estimated 18 per cent CAGR between FY25 and FY30. (ANI)