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“India CDMO sector is set to double by 2028. Here’s an in-depth analysis of Innova Captab Ltd and Laurus Labs Ltd – two pharma players with 33%+ CDMO revenue and strong growth outlook.”
India CDMO Sector: Two Pharma Players Riding the Outsourcing Boom
India CDMO sector (Contract Development and Manufacturing Organizations) is experiencing a massive growth phase and emerging as a key pillar of the country’s pharmaceutical industry. A CDMO acts as a one-stop partner for pharma companies, providing services that span from drug development to formulation, manufacturing, and even supply chain solutions.
Why India is Becoming a Global CDMO Hub
India currently holds only 5% of the global CDMO market, but this share is expected to double by 2028. The reasons are compelling:
- Cost-effective manufacturing with world-class infrastructure
- Large, skilled talent pool in pharma and biotech
- Rising global demand for outsourcing driven by the China Plus One strategy, as global giants diversify their supply chains
This perfect combination is creating a once-in-a-decade opportunity for Indian CDMO players. Today, we analyze two listed companies whose revenue from CDMO exceeds 33% and that appear well-positioned to benefit from this boom: Innova Captab Ltd and Laurus Labs Ltd.
1️⃣ Innova Captab Ltd: Integrated Pharma Player with CDMO Focus
Founded in 2005, Innova Captab Ltd operates across the pharmaceutical value chain with two key business segments:
- CDMO (71% of revenue) – Offering end-to-end solutions including oral solids, injectables, and complex dosage forms. Notably, 80% of CDMO revenues come from long-term customers (5+ years of association).
- Branded Generics (29% of revenue) – Focused on affordable, high-quality products sold through a network of 6,000 distributors across 60+ countries.
The company operates India’s third-largest tablet and capsule manufacturing capacity, with exports growing from 23% to 30% of total revenue.
Financial Performance Highlights:
- 3-year sales CAGR: 16% | 3-year profit CAGR: 26%
- Q1 FY26 sales: ₹352 Cr (+19.6% YoY)
- CDMO revenue: ₹249.5 Cr (+8% YoY)
- Operating profit margin improved to 14.8% (+48 bps)
While the CDMO business slowed after FY23 due to its cyclical nature, the company’s new Jammu facility (operational since January 2025) is expected to add ₹400 Cr revenue by FY26, backed by government GST-linked incentives for 10 years. Additionally, a new R&D center in Haryana will develop complex generics, strengthening both CDMO and branded generics growth.
Risks to Watch: Operational volatility, contract execution delays, API price fluctuations, and competition from domestic and global players.
2️⃣ Laurus Labs Ltd: Strong CDMO Growth Pipeline
Founded in 2005, Laurus Labs Ltd is a research-driven pharma and biotech company serving over 250+ clients in 80+ countries and partnering with 90% of the world’s top pharma companies.
Its business is divided into two verticals:
- CDMO (33% of revenue) – Mid to late-stage NCE project deliveries and complex chemistries
- Generics (67% of revenue) – APIs and finished dosage forms for ARV, oncology, cardiovascular, and gastrotherapeutics
Recent Performance (Q1 FY26):
- Revenue grew 31.4% YoY driven by CDMO demand and formulation business
- CDMO segment revenue up 130% YoY
- OPM surged to 24.33% (+1000 bps)
- Net profit jumped 13x YoY
Laurus Labs is also investing heavily in capacity expansion with ₹5000 Cr capex planned till FY28, focusing on microbial fermentation, gene therapy, and ADC GMP facilities. Management aims to keep Net Debt/Ebitda below 2.5x, with leverage improving steadily from FY24 levels.
Risks: Long operating cycles in CDMO projects can strain working capital. Delayed realization of project revenues could impact cash flows and capital structure in the next 2-3 years.
Why These Two Companies Stand Out
Both Innova Captab Ltd and Laurus Labs Ltd are strategically positioned to capture the next wave of global CDMO outsourcing:
- Diversified revenue mix with >33% contribution from CDMO
- Strong client base with global pharma majors
- Capacity expansions that can scale revenue over the next 3-5 years
- Favorable policy tailwinds and incentives supporting manufacturing in India
For investors, these companies represent potential mid-to-long-term compounders, provided they manage volatility in the CDMO cycle, working capital pressures, and execution risks efficiently.
Final Words
The Indian CDMO sector is witnessing a structural shift, with global demand moving steadily towards outsourcing and India positioned as the cost-competitive alternative to China. Innova Captab Ltd and Laurus Labs Ltd could be among the biggest beneficiaries of this megatrend over the next 3–5 years.
As always, do your own research, track quarterly numbers closely, and keep an eye on risks like working capital stress, competitive pressures, and regulatory changes before making any investment decision.
Disclaimer: This article is for educational purposes only and should not be considered financial advice. Please consult your financial advisor before making investment decisions.
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