China+1 Strategy Gaining Traction in Indian Pharma, But Full Monetisation Still Years Away: Goldman Sachs

New Delhi, June 25, 2025: The global ‘China Plus One’ strategy, which encourages companies to diversify their manufacturing and supply chain operations beyond China, is visibly gaining significant momentum within India’s pharmaceutical and biotech sectors. This is according to a recent equity research report by Goldman Sachs, although the firm cautions that the substantial financial benefits from this strategic shift are likely still 2–3 years away from full monetisation.

Early Signs of Transition Evident in Pharma Supply Chains

The report highlights that Indian pharmaceutical and biotech companies are now experiencing tangible benefits from the China+1 strategy. What were initially exploratory inquiries and Requests for Quotations (RFQs) are now converting into concrete pilot projects and small-scale contracts. This indicates a growing willingness among global pharmaceutical firms to reduce their over-reliance on China for manufacturing and supply.

These insights are based on Goldman Sachs’ observations during its 2nd annual India CRO/CDMO (Contract Research Organisation/Contract Development and Manufacturing Organisation) trip, which involved meetings with 10 listed and unlisted Indian firms across Bengaluru and Hyderabad last week. The trip revealed a notable increase in RFQs received by Indian companies from global clients, underscoring a clear shift in supply chain diversification efforts.

Companies like Syngene, Neuland Labs, and Divi’s are among those reported to have started converting RFQs into initial contracts over the last 1-1.5 years. For instance, Syngene has secured contracts from pilot projects related to geographical supply chain diversification, while Neuland Labs has won three projects from a large innovator seeking to shift its operations out of China. Similarly, TheraNym Bio, a subsidiary of Aurobindo Pharma, announced a decade-long commercial manufacturing deal with Merck Sharp & Dohme, demonstrating the long-term potential of such partnerships.

Full Monetisation Timeline: Still 2–3 Years Out

Despite this encouraging progress, Goldman Sachs emphasises that significant financial gains from these strategic shifts will take time to materialise. While pilot projects are a promising start, the journey to substantial revenue realisation will require continued engagement, successful operational scaling, and sustained execution excellence over the next couple of years. The report suggests that the “geographic supply chain diversification theme” is likely to unfold over a 3-5 year period, if not longer.

Strategic Significance 

India is already recognised as the “pharmacy of the world,” being the largest global supplier of generic medicines, which fulfils approximately 20% of global generics demand, and holds a 60% share of global vaccine demand. The country’s pharmaceutical services are also estimated to be around 20% cheaper than those offered by Chinese competitors, making it an attractive destination for global companies seeking cost-effective and high-quality manufacturing.

What’s Next? 

India’s pharma sector is gaining traction from the China+1 strategy, with firms like Syngene, Neuland Labs, and TheraNym Bio securing initial global contracts. Goldman Sachs notes that while pilot deals are underway, major financial gains are still 2–3 years away. India’s cost advantage and global reputation strengthen its position, but full-scale monetisation will need time, scale, and consistent execution.

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