Speciality chemical makers are betting big on pharma

The Street is gravitating toward speciality chemical manufacturers that supply contract development and manufacturing organizations (CDMO) and active pharmaceutical ingredient (API) makers, as uncertainty looms over the chemicals sector.

- Abhinaba Saha & Jessica Jani

Markets are favouring speciality chemical suppliers to CDMOs and API makers, considering their clearer growth visibility.

(MINT)

The reason, according to experts, is that suppliers to pharma firms enjoy clearer growth visibility, far less competition, and stronger margins than industry-linked speciality and agro-chemical businesses that dominate India's chemicals landscape.

CDMO intermediates need complex synthesis, rigorous regulatory scrutiny, and long qualification cycles. The natural barriers limit competition and strengthen long-term customer relationships, Vikash Agarwalla, managing director and partner at global consulting giant Boston Consulting Group, said.