Drug manufacturers are aiming to reduce their dependence on Chinese contractors involved in producing drugs for clinical trials and early-stage manufacturing. This shift is favoring competitors in India, as indicated by discussions with ten industry executives and experts. China has been the primary choice for pharmaceutical research and manufacturing services for nearly two decades due to the cost-effectiveness and swiftness offered by contract drugmakers there. Despite challenges such as the US-China trade war during the Trump administration and disruptions in supply chains faced by various industries amid the Covid-19 pandemic, this association largely remained intact. However, escalating tensions with China have led several Western governments to advise companies to diversify their supply chains to minimize exposure to the Asian powerhouse.

Some biotech firms are contemplating utilizing manufacturers in India to produce active pharmaceutical ingredients (API) for clinical trials or other outsourced tasks. Tommy Erdei, Jefferies' global co-head of healthcare investment banking, highlighted a trend where companies are refraining from sending requests for proposals (RFPs) to Chinese firms due to concerns, stating, "I'm not willing to risk my product entering China, even if they can offer a cheaper solution". Dr. Ashish Nimgaonkar, the Founder of Glyscend Therapeutics, a US-based biotech company focusing on type 2 diabetes and obesity treatments in early trials, also expressed that China has become a less appealing option for their operations.

Nimgaonkar mentioned Glyscend's preference for Indian contract development and manufacturing organizations (CDMOs) when issuing RFPs in later stages of medicine development. Additionally, four prominent Indian CDMOs - Syngene, Aragen Life Sciences, Piramal Pharma Solutions, and Sai Life Sciences - reported increased interest and requests from Western pharmaceutical companies, including major multinationals, this year.