Let me start with a disclaimer, I am not an expert in Pharma or Biologics, however, have been keenly observing the CDMO movement taking shape in the country and been pursued by leading Pharma and Biologics players. I would like to draw parallels with the ODM model in electronics design and manufacturing wave in early 80’s and 90’s.
I was deeply involved with the ODM business model which was flourishing by the 90’s and Taiwan emerged as a Leader in the Original Design Manufacturing (ODM) industry. (even in 2020 it still leads with largest share of ODM and OEM electronics design and manufacturing global exports). What struck me is that there are many similarities in the ODM and the CDMO business models and it would be good to be aware of the same and the lessons from it. The erstwhile leading Indian IT services companies and associated Investors totally got blindsided and missed the ODM bus as most of them were basking in the glory and growth of the HC led software/application coding and maintenance service model.
My stint at Tata Elxsi and Sasken in early 2000, gave me an opportunity to observe the ODM success model closely with my many visits to Taiwan and associations with the small and large ODM’s there, including participation in Computex- an Global Ecosystem annual event at Taipei. We did embark on the journey to emulate the ODM model here in India, but with limited success and therein lies the lessons learnt. The brands like BenQ, Foxcon, Westron are some of the well-known names and all have their origins for success in the ODM model. The critical ingredients for success were all there in Taiwan and coupled with the cultural and geographic proximity to China (in the 90’s they were less politically apart), they all established OEM (manufacturing bases in China) and together the ODM+OEM combo leading players still rule the global electronics design and manufacturing supply.
Many constituents need to come together to form an ecosystem for the ODM model success. Integrated Circuits makers – both Analog and Digital, Multi-layer precision PCB fabricators, Electronic components suppliers, LED display makers, electro-mechanical sub assembly makers and Electronic Test automation tools and experts and Design experts. Most importantly the ecosystem proximity enabled a tight collaborative working relationships leading to agility and adaptability to respond to customer requirements. Obviously, India never had any major success in Integrated Circuits/microprocessors/memory manufacturers, high density and precision PCB fabricators, and design services providers who can quickly convert a design to prototype. Hence in the wave-1 of ODM model, we could never gain market share. Taiwan, China, Thailand, Vietnam are still ahead of us.
Just like the ODM ecosystem, the Pharma CDMO also is about Custom synthesis for Pharma major customers and Biologics start up players who would prefer the entire lifecycle of molecule synthesis, integration, prototype, trials and manufacture at scale services to be delivered by a reliable, trusted CDMO partner. The main difference as compared the earlier ODM wave, is that all the ecosystem constituents for the success of CDMO business model, are already present in good measure and the Specialty chemicals manufacturing including API’s is being scaled in the country. Further geographic Chemical industrial clusters allow easy collaborative working relationships amongst them. Good news is that India has all the above constituents with world class companies, with cutting edge manufacturing processes and economies of scale. Adding to this, we have an ecosystem of Chemistry, Pharma and Biology scientists, all of which is coming together with aspirational managements with vision.
My stint at Tata Elxsi and Sasken in early 2000, gave me an opportunity to observe the ODM success model closely with my many visits to Taiwan and associations with the small and large ODM’s there, including participation in Computex- an Global Ecosystem annual event at Taipei. We did embark on the journey to emulate the ODM model here in India, but with limited success and therein lies the lessons learnt. The brands like BenQ, Foxcon, Westron are some of the well-known names and all have their origins for success in the ODM model. The critical ingredients for success were all there in Taiwan and coupled with the cultural and geographic proximity to China (in the 90’s they were less politically apart), they all established OEM (manufacturing bases in China) and together the ODM+OEM combo leading players still rule the global electronics design and manufacturing supply.
Many constituents need to come together to form an ecosystem for the ODM model success. Integrated Circuits makers – both Analog and Digital, Multi-layer precision PCB fabricators, Electronic components suppliers, LED display makers, electro-mechanical sub assembly makers and Electronic Test automation tools and experts and Design experts. Most importantly the ecosystem proximity enabled a tight collaborative working relationships leading to agility and adaptability to respond to customer requirements. Obviously, India never had any major success in Integrated Circuits/microprocessors/memory manufacturers, high density and precision PCB fabricators, and design services providers who can quickly convert a design to prototype. Hence in the wave-1 of ODM model, we could never gain market share. Taiwan, China, Thailand, Vietnam are still ahead of us.
Just like the ODM ecosystem, the Pharma CDMO also is about Custom synthesis for Pharma major customers and Biologics start up players who would prefer the entire lifecycle of molecule synthesis, integration, prototype, trials and manufacture at scale services to be delivered by a reliable, trusted CDMO partner. The main difference as compared the earlier ODM wave, is that all the ecosystem constituents for the success of CDMO business model, are already present in good measure and the Specialty chemicals manufacturing including API’s is being scaled in the country. Further geographic Chemical industrial clusters allow easy collaborative working relationships amongst them. Good news is that India has all the above constituents with world class companies, with cutting edge manufacturing processes and economies of scale. Adding to this, we have an ecosystem of Chemistry, Pharma and Biology scientists, all of which is coming together with aspirational managements with vision.
This makes me feel confident that in this wave of CDMO, India will be far more successful than the earlier ODM wave and make a name for itself with significant market share.. Huge opportunities exist for creative minds and investors alike.
