Goldman Sachs launches coverage on 3 India CRO/CDMO’S

Goldman Sachs launches coverage on 3 India CRO/CDMO’S


Goldman Sachs has expanded its coverage to the India CRO/CDMO (contract research organization/contract development and manufacturing organization) space as supply diversification in the global pharmaceutical industry picks up. In a note, analysts initiated coverage on three stocks – two Buys and one Sell.

The Pharma R&D outsourcing TAM, currently $200 billion, is seeing double-digit annual growth, noted analysts, and Goldman expects India’s share to increase 30 basis points in small molecule CDMO and 70 bps for CROs by the end of FY28. These gains could be three-fold in a bull-case scenario where China+1 trends accelerate faster.

Analysts at Goldman expect growth in India’s share to come from three Cs: Capacities coming online, Capabilities improving and Customer traction.

On their expectations for growth in the space, analysts added,“We expect 22% OP growth over FY24-27E, driven by 13% topline growth while factoring operating leverage benefits, putting our FY26-27E EPS estimates 4%-10% above consensus. While the sector is trading at premium valuations (+1SD vs. its 5Y average), we argue that higher multiples are warranted given this strong earnings outlook.”


The three stocks the firm has initiated coverage on are:

1. Syngene

Syngene (SYNN) enjoys a leading position in the CRO space and its CDMO business is also set to inflect, leading to a Buy rating at the firm and a price target of INR 875.

2. Neuland

Neuland stock (NEUL) has also been given a Buy rating with a price target of INR 9,100. The firm sees 46% upside potential for Neuland as it’s a fast-growing CDMO with a “higher share coming from commercialized molecules.”

3. Laurus

Finally, Goldman has launched Laurus (LAUL) at Sell with a price target of INR 350 owing to earnings challenges from monetization delays, and premium valuations.

That’s interesting news for the Indian pharmaceutical sector! Here’s a breakdown of what Goldman Sachs’ move signifies:

Goldman Sachs Enters the CRO/CDMO Space:

  • Goldman Sachs is expanding its research coverage to include Contract Research Organizations (CRO) and Contract Development and Manufacturing Organizations (CDMO) based in India.

Reasons for the Move:

  • This indicates Goldman Sachs’ belief in the growth potential of the Indian CRO/CDMO industry.
  • The global pharmaceutical industry is looking to diversify its supply chain, and India is seen as a favorable option (due to factors like cost-effectiveness and expertise).

Goldman Sachs’ Analysis:

  • The report highlights a projected double-digit annual growth in the global pharmaceutical R&D outsourcing market (currently valued at $200 billion).
  • Goldman Sachs expects India’s share in this market to increase significantly, particularly in small molecule CDMO and CRO segments.

Specifics of the Coverage:

  • Goldman Sachs has initiated coverage on three Indian CRO/CDMO companies:
    • Syngene (Buy rating, target price INR 875): A leading player in the CRO space with a growing CDMO business.
    • Neuland Labs (Buy rating, target price INR 9,100): A fast-growing CDMO with a focus on commercialized molecules.
    • Laurus Labs (Sell rating, target price INR 350): Goldman Sachs sees challenges for Laurus due to potential delays in monetization and premium valuations.

Overall Impact:

  • Goldman Sachs’ involvement brings more attention and potentially more investment to the Indian CRO/CDMO sector.
  • The ratings and target prices offered can influence investor decisions regarding these companies.

Looking Further:

This news could be a positive sign for the Indian CRO/CDMO industry. It’s worth keeping an eye on how these companies perform and how the sector develops in the coming months.


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