Indian CDMOs get a growth pill

The proposed India-EU free trade agreement (FTA) could mark a structural turning point for India’s contract development and manufacturing organisation (CDMO) industry, strengthening its role in European pharmaceutical supply chains and accelerating the shift of complex manufacturing to India.

- ANJALI SINGH

Industry executives and analysts say the agreement goes beyond incremental export gains, addressing longstanding cost, regulatory and access barriers that have shaped outsourcing decisions by European pharma companies. Phased elimination of tariffs on pharmaceuticals, currently ranging between 2 per cent and 11 per cent, is expected to significantly improve the landed cost economics of India-made drugs and intermediates in Europe's tightly regulated euros 300 billion medicines market.

“The India-EU FTA provides substantial benefits for the pharmaceutical and medical devices sectors, subject to phased implementation,” said Suresh Nair, partner ~ indirect tax, EY India. “The EU will eliminate tariffs of up to 11 per cent on pharmaceuticals and reduce duties on around 90 per cent of medical devices from as high as 27.5 per cent to zero. This strengthens regulatory cooperation, simplifies compliance procedures, and improves the competitiveness of Indian exporters,” Nair added.