Operating Environment

The global pharmaceutical pipeline continues to expand at a steady ~6% annually, with 1,000–1,200 new early-stage assets added each year and over 40 new drug approvals annually in the U.S. alone.

While small molecules are growing at 2‑3%, large molecules and next-generation technologies are advancing faster at 8–10%. These include monoclonal antibodies, ADCs, oligonucleotides, peptides, cytokines, and cell therapies, which are projected to make up 55‑60% of the total pipeline by 2030, up from 45‑50% in 2023. This shift is driving increased demand for specialized services from CDMOs.

Implications for Syngene: We are proactively investing in capabilities, capacity, and scientific talent – particularly in high‑growth areas such as ADCs, peptides and oligonucleotides, to stay aligned with evolving customer needs.

Biotech companies now contribute to nearly 50% of early-stage drug development, underscoring their growing role in pharmaceutical innovation. Operating with asset-light business models, they increasingly rely on CRDMOs for research and manufacturing support.

While biotech funding returned to near pre-COVID levels in 2024, the recovery remains unpredictable. Q1 CY25 U.S. Biotech Funding was down by 43% compared to Q1 CY24 reflecting continued volatility. As funding stabilizes, early-stage research is gradually regaining momentum, translating into more RFPs and CRO enquiries. However, many customers remain cautious and are commissioning smaller work packages and extending timelines. In contrast, demand for CDMO services is picking up, as biotech companies progress late-stage assets toward key value inflection points.

Implications for Syngene: We remain cautiously optimistic about biotech-driven growth depending on the rate of recovery in funding. Customer engagement remains strong, with increased RFPs, business closures and client visits, in FY25 compared to FY24

Large pharmaceutical companies are facing rising cost pressures, largely due to a looming patent cliff and ~USD 93 Bn in revenue from both biologics and small molecules is expected to go off-patent between 2024 and 2028. In response, many are accelerating efforts to improve productivity, rationalize internal networks, and expand outsourcing to CRDMO partners.

Adding to the pressure is the U.S. Inflation Reduction Act (IRA), which allows U.S. Medicare to negotiate drug prices. This is likely to shorten the commercial lifespan of drugs – down to nine years for small molecules and 13 years for biologics – potentially reducing return on investment for new launches. While pharmaceutical companies’ responses to IRA vary, the common trend includes pipeline optimization, faster development timelines, and increased external partnerships.

The U.S. government has recently signed an executive order introducing a Most Favored Nation (MFN) pricing policy, mandating that drug prices in the American market be benchmarked against the lowest price paid by any other country for the same medication. This directive aims to bring substantial cost savings for U.S. consumers. However, the move is expected to face pushback from the pharmaceutical industry, with concerns that manufacturers may respond by increasing prices in traditionally lower-cost markets to offset potential revenue losses and sustain R&D investments.

As the policy remains in its early stages, markets like India will need to closely monitor its implementation and assess the broader implications as the U.S. administration advances with further actions.

Implications for Syngene: With pharmaceutical companies looking to maximize R&D efficiency and value, outsourcing will remain a key lever. As a high-quality, cost-effective partner with strong infrastructure and talent, Syngene is well-positioned to benefit from this shift.

Rising geopolitical concerns and the broader China+1 strategy are prompting global pharmaceutical companies to reassess and diversify their outsourcing footprints. India is emerging as a credible alternative, especially as customers look to consolidate operations outside China.

The proposed U.S. Biosecure Act initially signaled a faster shift in this direction, but its future now remains uncertain. Nonetheless, it has amplified focus on supply chain resilience and diversification. Even as the industry awaits policy clarity, many global pharmaceutical companies have begun evaluating alternative hubs, thus creating long-term tailwinds for countries like India. We have seen increasing client site visits and pilots in Research Services due to clients looking to diversify their supply chains. As these pilots progress into long-term partnerships, we expect them to be a key growth driver for our research business.

Implications for Syngene: Regardless of the Act’s outcome, the trend towards geographic diversification is expected to continue. Over the next eight to ten years, this shift could unlock a USD 5 Bn+ opportunity for China-alternate markets such as India and Korea. Syngene is well-positioned to benefit, offering a compelling combination of cost efficiency, scientific depth, and regulatory compliance.

India’s CRDMO sector is gaining traction, driven by supportive policy reforms, infrastructure development, and increasing investment in innovation. Initiatives such as the BioE3 Policy (approved in August 2024), a USD 3 Bn capital outlay for the pharmaceutical and API sector, and the development of dedicated biotech parks are reinforcing India’s position as a global life sciences hub. While policy frameworks continue to evolve, the domestic CRDMO industry is expanding rapidly – bringing with it heightened competition for high-end scientific talent and growing pricing pressures as more players scale up.

Implications for Syngene: We remain focused on enhancing productivity, optimizing cost-to-serve, and investing in next-generation technologies to sustain our competitive edge. Our people strategy is designed to build a strong, future-ready workforce, while our commitment to being an employer of choice helps us attract and retain top-tier talent driven by purpose, growth, and impact.

Rapid advancements in predictive and generative AI are beginning to transform the CRDMO landscape. In R&D, AI can accelerate compound screening, optimize bioassays, and reduce time-to-laboratory – all while allowing innovators to explore a broader set of molecules within the same budget. In manufacturing, AI supports real-time anomaly detection and improves adherence to GMP and regulatory requirements, driving both quality and efficiency.

Beyond the laboratory, AI is reshaping business functions by automating repetitive tasks, optimizing workflows, and enhancing decision-making across areas such as finance, procurement, and workforce management.

Implications for Syngene: As AI continues to evolve, Syngene is actively building awareness of emerging capabilities, piloting new tools, and investing in scalable digital solutions. With a focus on strengthening IT systems, improving laboratory productivity, and creating customer-centric digital platforms, we are well‑positioned to harness AI’s full potential and drive future‑ready operations.