What’s going on in CDMO

Across 65,700 words of management talk this quarter, “China+1” is said twice. The Biosecure Act is mentioned once — by a chief executive who introduced it with “one factor, which I forgot to mention”.

The published case for Indian pharma is that the world is leaving China. The companies are describing something else: importing the model that made China’s contract manufacturers hard to leave.

“If you look at the WuXi model… What India has seen as a first phase is discovery chemistry services and then tech transfer at late-stage commercial manufacturing. But what we are seeing now is the middle part.” Krishna Kanumuri, CEO · Sai Life Sciences · 7 August 2026

His finance director: “This is how China built some of the larger CDMOs.” Neuland wants to “work like a platform partner”; Piramal calls it “land and expand”. All eight are trying to become structurally hard to remove — the thing Western legislation is meant to punish in Chinese hands.

Seven of the eight sold more in FY26 than in any year of their history. Only three earned more.

Divi’s profit is 13% below its FY22 peak on 18% more revenue. Gland is 15% below FY22 on 46% more. Laurus earns less today than it did in FY21 — after ₹4,700 crore of capital spending — and its shares are up 108% in a year at 111 times earnings. Syngene is 38% below FY24. Piramal lost money.

Five years of work has added 61% to the sector’s sales and 3% to its profit.

The profit line peaked in the COVID window and has only just clawed back to where it started. That gap is why the two highest ratings here belong to companies earning less than they did four and five years ago.

Every year these eight have on file — ten for the oldest, six for the youngest — adds up to ₹37,933 crore of reported profit. After paying for the plants they built, ₹4,042 crore was left as cash.

Eleven paise in the rupee. They are worth ₹5.28 lakh crore — 131 times all the spare cash the industry has ever made.

Divi’s produced more of it than the other seven together. Piramal is ₹3,862 crore short, having paid lenders ₹1,917 crore since FY21 against ₹808 crore of profit for its owners. Laurus paid ₹1,263 crore of interest to keep ₹261 crore.

And another ₹6,119 crore of plant stands unfinished — one rupee in five of everything they have ever built, earning nothing yet.

The rupee fell about a tenth against the dollar this year. These companies sell abroad and report at home, so part of the growth on every screen is the exchange rate, not the business.

Three of the eight said how big that part was. Piramal: “9% to 10%” against 17% reported. Gland: 20% reported, 15% constant currency. Divi’s: 22.7% standalone, 10% constant currency.

Neuland volunteered only that exchange rates had been “favourable”, unquantified, in a quarter revenue more than doubled.

Laurus, whose 29% growth carries the sector’s highest rating, was asked for the constant-currency figure three times by two analysts. Its finance director said 2%, then said that was a different comparison, then:

“That’s what. Vivek will offline tell you.” V. V. Ravi Kumar, CFO · Laurus Labs · 24 July 2026

Syngene guides for a decline “in rupee terms” — worse in dollars.

Peptides are what every serious player is building for. Talk about them, and money spent on them, run in opposite directions.

Sai Life says “peptide” twenty-eight times and has committed, on its own estimate, “probably less than ₹300 crores” through 2028. Neuland says it nineteen times and says “GLP-1” not once — while spending ₹121.6 crore in one quarter inside ₹1,460 crore approved.

Divi’s, with about ₹2,000 crore committed, was asked directly whether the quarter contained GLP-1 supply:

“See, I cannot answer that question if you ask me about GLP-1s or small molecules.” Dr Kiran S. Divi, CEO · Divi’s Laboratories · 1 August 2026

Laurus, on semaglutide: “we are not able to discuss any project-specific details.” Piramal and Syngene did not use the word once — and have the two worst returns on capital in the group.

Three of the eight own manufacturing plant in America or Europe: Piramal five sites, Gland three, Syngene one — Baltimore, bought and not yet running. Sai Life has Western addresses too, in Boston and Manchester, but they are research sites its own finance chief calls “satellite centers”.

Those three are the three lowest margins in the sector.

Piramal 10.4%, Syngene 24.6%, Gland 25.3%. The five that manufacture only in India earn 39.3%, 32.6%, 28.8%, 28.7% and 26.2% — Sai Life among them, at 28.8%, which is roughly what a Western lab costs you against a Western factory.

Gland’s French business turned €48 million into €2 million last quarter — 4% against 28% at group. The clearest measure of what a Western plant costs is the wage bill.

Gland’s employee cost was 7.7% of sales in FY22. In FY26 it is 25.3%. Revenue rose 1.46 times. The wage bill rose 4.81 times.

Asked whether big pharma now prefers Western sites, the chief executive of the company with the most of them answered in two words:

“Not really.” Peter DeYoung · Piramal Pharma · 30 July 2026

Every one of these is called a pipeline. Gland counts 389 US filings. Sai Life counts 150–160 molecules. Anthem counts 100+ projects. Laurus counts 96 dossiers. Divi’s counts 4 master files. Piramal updates once a year. Syngene gives no number at all.

“We should keep them as projects just given the amount of failures that happen at that stage.” Siva Chittor, CFO · Sai Life Sciences · 7 August 2026

And the count is not the business. Sai Life and Anthem are the same size — ₹2,192 crore against ₹2,124 crore. Sai Life has 33 molecules in commercial supply; Anthem has 14. Anthem earns 39.3%, Sai Life 28.8%.

Neuland sharpens it: its commercial count has been 19, 18, 19, 19 across four years, while the revenue those molecules produce rose three and a half times in one.