India's CDMO Surge: Strong FY25 Performance Fuels Ambitious Expansion & Strategic Bets for Future Growth

Niraj 2025-05-20

Financial Performance

Aarti Pharmalabs Limited reported that its CDMO business experienced significant volatility in FY25, with 10% of revenue in H1 and 90% in H2. The company exceeded its initial 15% growth target for FY25, achieving 24% growth. Other income was negatively impacted by forex losses, and the Ganesh Polychem business saw an EBITDA decline due to a slowdown and planned facility upgrade.
Jubilant Pharmova Ltd's CDMO Sterile Injectables segment showed strong growth in Q4 FY25, with revenue increasing 31% year-over-year (YoY) to ₹340 Cr and EBITDA growing 63% YoY to ₹95 Cr. The EBITDA margin improved by 540 basis points (bps) YoY to 28% in Q4 FY25. For the full fiscal year FY25, CDMO Sterile Injectables revenue grew 14% YoY to ₹1,272 Cr, EBITDA increased 52% YoY to ₹292 Cr, and the EBITDA margin improved 570 bps YoY to 23%. This growth was attributed to increased demand volume and pricing. The Drug Discovery business also reported a 27% revenue increase and 29% EBITDA growth in FY25.
Sai Life Sciences Ltd reported a 16% revenue increase for FY25, with the EBITDA margin expanding to 25%. Profit After Tax (PAT) showed a substantial 105% increase, benefiting from reduced finance costs and improved operating leverage. The CDMO segment contributed 63% of the total revenue in FY25.
Alivus Life Sciences Limited achieved strong Q4 FY25 financial results with revenue at ₹6,496 million (up 21.1% YoY), EBITDA at ₹2,085 million (up 44.2% YoY), and PAT at ₹1,419 million (up 44.9% YoY). The EBITDA margin was 32.1%, an increase of 520 bps YoY. The CDMO business, representing 7% of revenue, grew 22.6% YoY and 44.4% quarter-over-quarter (QoQ) in Q4 FY25. The company maintained EBITDA margins at 30% for the full year despite the absence of PLI benefits and market headwinds.
Piramal Pharma Limited's CDMO business saw a 15% revenue growth in FY25, reaching ₹5,447 Cr. Overall, the company's revenue grew 12% YoY in FY25 to ₹9,151 Cr. EBITDA for FY25 increased 15% YoY to ₹1,580 Cr, with a stable EBITDA margin of 17%. On-patent commercial manufacturing revenues within CDMO grew by over 50% YoY to reach US$179 million in FY25. Revenue from differentiated offerings grew 28% YoY and contributed 49% to CDMO revenues.
Neuland Laboratories Ltd reported a 4.5-5% degrowth in FY25 compared to FY24, primarily due to a down year in the CMS segment. Management noted that FY24 margins were highly optimized, and they expect margins to improve from the suboptimal levels seen in FY25, though increased operating expenses from capital deployment will impact recovery.

Capacity Expansion & Capex

Aarti Pharmalabs Limited has invested ₹400 Cr in the Atali Phase-I facility, expecting 70-80% utilization this year and full ramp-up by FY27, which will support both intermediates and CDMO businesses. This indicates a future need for Phase II. The company is also doubling the capacity of its aerospace application product and planning capacity additions in API and Xanthine.
Laurus Labs Ltd is directing the majority of its capital expenditure towards servicing CDMO products. The company plans to invest approximately $15 million in Antibody-drug conjugate (ADC) conjugation services.
Jubilant Pharmova Ltd is increasing its Full-Time Equivalent (FTE) capacity by four times to 4,000 FTEs in a phased manner to meet increasing demand.
Sai Life Sciences Ltd's Capex for FY25 totaled ₹408 Cr, primarily focused on enhancing manufacturing and expanding discovery capabilities. The company is investing in R\&D and manufacturing capacity, talent acquisition, technology, and HSEQ practices. They also launched a Peptide Research Centre to address demand for complex peptides.
Alivus Life Sciences Limited is undertaking a Greenfield expansion in Solapur (1000MT facility), with construction having started for Phase 1 (200 KL). Further expansion is planned at their Dahej and Ankleshwar Pharma sites, and they are building standalone R\&D infrastructure.
Onesource Specialty Pharma Limited has capacity expansion underway, with the first phase expected to conclude by year-end, increasing capacity to over 90 million. They are also adding a new production line.
Navin Fluorine International Ltd expects its Fluoro Specialty capex to reach 50-55% of its peak revenue potential in FY26.

Outlook and Guidance

Aarti Pharmalabs Limited guided for 12-15% revenue growth and EBITDA margins for FY26, acknowledging conservatism due to initial Atali expenses. They expect faster growth than this guidance and project FY27 as a significant growth year contingent on CDMO project approvals and organic growth. They anticipate the H2 of FY26 to be stronger than H1, similar to the pattern seen in FY25.
Laurus Labs Ltd expects revenue and profitability growth in FY26 compared to FY25. However, they declined to provide specific revenue growth forecasts for the CDMO segment in FY26. They expect limited formulation growth in the first two quarters of FY26. More information on FY26 performance will be provided in the next quarterly call.
Ami Organics Ltd guided for 25% revenue growth in FY26, driven by CDMO, new contracts, generic molecules from patent expirations, and electrolyte additives production. They expect EBITDA margins to be higher than the 23% reported in FY25, despite potential softness in H1 due to seasonality.
Hikal Ltd expects 12-15% revenue growth in FY26. EBIT margin is projected to increase proportionally with revenue growth due to operational leverage.
Neuland Laboratories Ltd expects growth in both CMS and GDS segments in FY26, with CMS showing a higher percentage growth. They maintain a long-term outlook of 20-25% top-line CAGR over a 2-3 year timeframe, although the 25% is not a hard target. They are confident in FY26 growth and expect margins to improve from FY25 levels, aiming for higher margins, but declined to provide specific FY26/FY27 margin guidance.
Onesource Specialty Pharma Limited reaffirmed its near-term outlook for FY28, targeting $400 million in revenue with a significant EBITDA margin in the 38% to 40% range organically. FY26 is anticipated to be a transition year with lumpy quarterly performance due to the timing of commercial sales of Drug-Device Combination (DDC) products, which are dependent on regulatory approvals. FY27 is expected to show more consistent quarter-over-quarter growth.
Alivus Life Sciences Limited expects their 5th CDMO project to be commercialized by H2 FY26. The company remains committed to sustainable growth, stable margins, and long-term value creation through investments and product pipeline expansion.
Piramal Pharma Limited aims to achieve $2Bn in revenue by FY2030 with 25% EBITDA margins and high teens Return on Capital Employed (ROCE).

Market Trends and Challenges

Aarti Pharmalabs Limited expects the volatility in the CDMO business to continue due to large volume customer orders. Some recently scaled-up projects are still in the FDA approval process.
Laurus Labs Ltd's CDMO revenue volatility has reduced due to an increased number of active projects, many in late-stage development. They noted industry-wide pricing pressure on API products. The company is watchful about current macro-economic uncertainties and an incomplete and inconsistent recovery in funding for emerging biopharma companies.
Neuland Laboratories Ltd observed a decrease in pre-registration molecules in the CMS pipeline without a corresponding increase in commercial products, which management attributed to customers delaying adding second sources or not reaching the required scale. They noted that FY25 degrowth was due to a significant down year for the CMS segment and that factors beyond their control, such as product mix shifts, exchange rates, and raw material costs, affected growth.
Hikal Ltd is navigating challenges in the global business environment, including geopolitical uncertainty, supply chain recalibration, and persistent cost pressures. Despite this, the global pharmaceutical industry is positioned for renewed momentum and growth.
Onesource Specialty Pharma Limited highlighted that the timing of commercial sales for their DDC products is heavily dependent on regulatory approvals and market entry timing, leading to anticipated lumpy performance in FY26.
Navin Fluorine International Ltd reported that the impact of tariffs was neutral to positive, with minimal effect on customer strategies or outsourcing decisions. Customers are prioritizing molecule success over tariff worries. The company is shifting towards more late-stage molecules in CDMO to reduce lumpiness.
Piramal Pharma Limited is cautious about macro-economic uncertainties and the inconsistent recovery in funding for emerging biopharma.

Strategic Initiatives and Business Model

Aarti Pharmalabs Limited focuses on Phase 3 CDMO projects with a diverse customer base of 21 customers and 60 products to provide stability. They expect strong growth from their top 5 API export products and plan new product launches. The company is consciously focusing on a profitable API product mix and increasing the CDMO revenue mix.
Laurus Labs Ltd expects margin improvement as the CDMO segment's share increases. The company is investing in ADC conjugation services. Non-ARV formulation sales are expected to increase from Q3 FY26 due to new approvals and CMO expansion. Laurus Labs operates an integrated CRDMO model and benchmarks itself against global players. The CDMO business currently constitutes approximately 30% of total revenue.
Jubilant Pharmova Ltd is positioned as a leading CRDMO, emphasizing superior customer relationships, including 8 of the top 20 pharmaceutical companies. They are expanding their presence in Europe through a strategic partnership with Pierre Fabre, focusing on Biologics (mAbs) and ADC, in addition to integrated drug discovery. Their API growth strategy includes strengthening CDMO for NCEs, custom manufacturing for large pharma, and a China Plus One strategy for supply chain resilience. The company is investing in R\&D and enhancing operational efficiencies.
Sai Life Sciences Ltd emphasizes its integrated CRDMO model and value proposition, which is not tied to binary drug approval outcomes but focuses on consistent, scalable value through scientific depth, execution reliability, and long-term client partnerships. R\&D investments translate to revenue opportunities regardless of drug approval results. The company is leveraging India's position as a strategic hub in global drug development. They are a member of the ACS Green Chemistry Institute Pharmaceutical Roundtable.
Hikal Ltd is strengthening its core businesses and optimizing operations for long-term growth. Initiatives include establishing a Specialty Chemicals portfolio, engaging with innovator CDMO customers on advanced projects, and optimizing personnel costs. They are focusing on front-end capabilities, talent development, collaboration, and innovation, including sustainability, digitalization (AI), and product differentiation.
Neuland Laboratories Ltd acknowledges the cyclical nature of its business but emphasizes the stability of its business model, increasing business scale, and consistent addition of molecules aligned with the company's stated themes.
Onesource Specialty Pharma Limited operates as a one-stop CDMO provider, offering services for drug-device combinations, sterile injectables, and soft gelatin capsules. They have added 15 new customers and experienced significant repeat business, with over 70 customers including innovators, biotech, and global generics. The company has successfully completed several regulatory audits. Their diverse customer base helps ensure that success is not dependent on a single customer's product approval.
Navin Fluorine International Ltd's CDMO business specializes in fluorospecialty chemicals. The company is focused on both product and service plays, with R\&D infrastructure supporting in-house development and partnerships. They are shifting towards more late-stage molecules in CDMO to reduce lumpiness.
Piramal Pharma Limited's CDMO business is driven by innovation-related work, accounting for over 50% of their efforts, particularly commercial manufacturing of on-patent molecules. They highlight differentiated offerings such as Peptides, Potent sterile injectables, On-patent API development, ADCs, Hormonals, and HPAPI. The company's globally diversified facilities network positions it well regarding customer geographical preferences. Piramal Pharma has a strong quality track record with 'Zero OAI' status since 2011.

Order Book/Pipeline

Aarti Pharmalabs Limited expects some large molecules to be sustainable and has identified molecules with potential for a ₹1,500 crore contribution within 1-2 years. Their FY27 growth is contingent on CDMO project approvals, and some scaled-up projects are still awaiting FDA approval. The CDMO pipeline, including Darolutamide, is seen as strong.
Neuland Laboratories Ltd saw a decrease in pre-registration molecules in the CMS pipeline in Q4 FY25, which was not offset by commercial products. They have long-term supply agreements for all CMS molecules. A new molecule was commercialized in FY25 in the CMS segment, and FY26 growth is expected based on order values. They acknowledge lower order fulfillment in FY25 compared to FY24 and consistently add molecules aligned with their strategy.
Onesource Specialty Pharma Limited has a strong order book with forecasts extending to the next 3 years. They have approximately 50 DDC projects in various stages, which are expected to contribute significantly to revenue from FY26 onwards.
Navin Fluorine International Ltd has an aspiration for $100 million in CDMO revenue by FY27. They project this growth will come from existing contracts, new Master Service Agreements (MSAs), and base business. The success of a major commercial molecule could significantly boost revenue. Q4 FY25 is seen as a strong start for CDMO revenues.
Alivus Life Sciences Limited added their 4th CDMO project in FY25, and the 5th project is expected to be commercialized by H2 FY26. Discussions are ongoing for further projects. They added four synthetic small molecules to their development grid and are progressing development in their HP API portfolio (24 products) and iron complexes. Product pipeline expansion is a focus area.
Piramal Pharma Limited is driving CDMO growth through commercial manufacturing of on-patent molecules, which are part of their existing business and pipeline.