Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Asia’s CDMO pharma companies (contract development and manufacturing organisations) have experienced significant growth in recent years and have emerged as key players in the global pharmaceutical industry. On the strength of lower labour and manufacturing costs, a skilled workforce, and improved infrastructure, they provide a range of services, from drug development to commercial manufacturing.
As a result, Asian pharma CDMOs are successfully aiding pharmaceutical companies in developed markets that are battling with high R&D and production expenses. They are doing so by enabling them to launch new products or formulas without having to invest in additional infrastructure.
“As flexible third-party service providers, CDMOs support pharmaceutical companies at all stages of the process of making medicines: by providing services in the research and development stages, by offering support in manufacturing, and by providing formulating and finishing processes,” said Ernst and Young.
Looking forward, the Asia pharma CDMO market is expected to grow at a CAGR of 9.9% from $60.82 bn in 2022 to $140.03 bn by 2031, as per a report by Astute Analytica. The market researcher projects that countries like China, India, and South Korea will continue to drive the Asia Pacific CDMO market.
Asia’s CDMO pharma companies propelled by biomanufacturing
The rise of Asia’s CDMO pharma companies coincides with the fact that the region has become the leading global provider of active pharmaceutical ingredients or APIs. In the future, the Asia-Pacific pharma CDMO market is expected to generate 60% of its revenue from APIs.
“Asia’s decade-long investment in the pharmaceutical industry, and its increasing ability to manufacture consistent, high-quality APIs meant that by 2020, the region was producing more than 60% of the world’s APIs,” said Nikko Asset Management.
“China alone accounted for the bulk of exports of several key pharmaceutical raw materials…India is the world’s largest exporter of generic medicines and has one of the lowest manufacturing costs globally… one in three pills consumed in the US (and one in four in the UK) are made by Indian manufacturers,” the Japanese asset manager added.
In addition to producing the majority of APIs and generic medicines, Asia’s CDMO pharma companies are also showing promise in the realm of biologic and biosimilar drugs. Biologic drugs are composed of proteins, nucleic acids, and living organisms such as avian cell culture, yeast, bacteria etc. Biosimilars are biologic drug variants that have effectively demonstrated efficacy comparable to the original biologic drug.
Due to the significant capital outlay required, pharmaceutical companies in developed markets have moved to cut back on their expenditures in sizable biologic processing facilities. Nikko AM asserts that this has fueled the growth of Asian biologic contract manufacturing firms.
“In 2022, Asia-Pacific (biologics market) was growing due to the rising prevalence of chronic diseases such as diabetes and cancer. China is expected to dominate the market due to recent advancements in biologics,” said Data Bridge Market Research.
As per a report by Grand View Research, Asia Pacific is projected to become the fastest-growing regional biologics contract manufacturing market between 2022 and 2030.
“The regional growth can be attributed to the alteration in the clinical trial evaluation standards by regulatory organisations of biologics according to the global requirements. In addition, the costs of conducting clinical trials are low in Asia Pacific as compared to other regions,” the report added.
How to invest in Asia’s CDMO pharma companies?
The following Asia’s CDMO pharma companies might benefit from the industry trend:
Samsung Biologics
Samsung Biologics is the biotech division of South Korea’s Samsung Group. The company provides contract development and manufacturing services to the global biopharmaceutical industry. The company announced that its revenue increased by 41% year over year to 720.9 bn won ($559.62 mn) in the first three months of 2023. During the same period, its operating profit increased by 9% to 191.7 bn won ($148.88 mn).
Listed on the Korea Stock Exchange (KRX: 207940), Samsung Biologics has a market capitalization of $42.76 bn. The company’s stock has fallen by 7.45% in the past year. It has a PE ratio of 69.44 and a forward PE ratio of 64.10. The stock has a price-to-book ratio of 6.04.
“In-line with the company’s three-dimensional growth strategy, Samsung Biologics continues to sharpen its competitive edge through expansions in capacity, geographic presence, and business portfolio,” said Global Healthcare Analyst Tina Banerjee, who publishes on SmartKarma.
WuXi Biologics
WuXi Biologics, headquartered in China, is a CDMO that offers open-access, integrated technological platforms for the development of biologics drugs. The company registered a 48.4% year on year rise in revenue, amounting to 15,268.7 mn yuan ($2.12 bn) in 2023. During the same period, its net profit surged by 47.1% year on year to 6,724 mn yuan ($936.89 mn).
WuXi Biologics has a market cap of $2.24 bn and is traded on the Hong Kong Stock Exchange (HKG: 2269). The company’s shares have fallen by 29.56% since last year. It has a forward PE ratio of 29.85 and a PE ratio of 37.47. The company’s stock has a price-to-book ratio of 5.13.
Besides Hong Kong, American Depository Receipts (ADR) are listed on NASDAQ (OTCMKTS: WXIBF) in the US and are accessible through over-the-counter transactions.
Syngene International
Syngene International is a subsidiary of the Indian biopharmaceutical company Biocon. The CDMO that offers research, development, and manufacturing services to the biotechnology, nutrition, animal health and consumer goods industries among others.
The company’s net profit rose by 21% year on year to Rs 179 crore ($21.80 mn) in the first three months of 2023. During the same period, the company’s revenue increased by 31% year on year to Rs 994 crore ($121.07 mn).
The company’s stocks are listed on the Bombay Stock Exchange (BOM: 539268) and the National Stock Exchange of India (NSE: SYNGENE). Syngene has a market cap of $3.62 bn. Since last year, the company’s shares have gained 38.22%. Along with that, the shares have a PE ratio of 62.34 and a price-to-book ratio of 8.26.
Editor’s note: All stock movement figures as of June 20, 2023.
