India’s Contract Research Development and Manufacturing Organisation (CDMO) industry is set for a significant boom, with an estimated $6 billion opportunity over the next three years, according to Madhu Kela, Founder of MK Ventures. He said that India currently holds just 4% of the global CDMO industry, presenting vast potential for growth.

The total global CDMO market, currently valued at $214 billion, is projected to reach north of $300 billion by 2028, representing a 42% increase.

In contrast, India’s share is expected to grow from $8 billion in 2024 to around $14 billion, marking a 75% increase.

“This is not a three-year story. This is a long-term story, while the estimates which we have is only for three years. But I am quite confident that this will carry on for a decade or two,” he said.

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Kela compared the rapid development of India’s pharmaceutical sector to the IT boom, emphasising its critical role in the country’s economic landscape. From being a mere active pharmaceutical ingredient (API) supplier, India has progressed to manufacturing complex generics, expanding its presence in both domestic and international markets.

Indian pharmaceutical companies have also enhanced their margins, rising from 15% a decade ago to around 23% today.

In a market where broad indices may only deliver modest returns, India presents a fertile ground for astute stock pickers. Kela asserts that India is, and will continue to be, a “stock picker’s market.”

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He believes that despite market volatility, significant returns are achievable by focusing on specific sectors and companies, rather than relying on overall market trends. “Because of the volatility and the fluctuation, and because there is a choice of so many sectors, you have the opportunity to make 15-20% kind of returns still in these markets,” he said.

He cautions against expecting the exceptional returns seen post-COVID, stating, “People must not extrapolate what has happened post-COVID.” These gains, he argues, were largely a result of the dramatic market lows followed by a rapid rebound.

Kela attributes the recent market correction to inflated valuations, a “stock market problem,” rather than underlying economic or corporate issues.

For the full interview, watch the accompanying video

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