There are a few optimistic companies that are betting on growth in the midst of inflation, rising crude oil prices and a worldwide economic slowdown.
Some custom research and manufacturing services (CRAMS) players believe that the pressure on costs will result in more outsourcing opportunities.
This view is spurring investments with Dishman Pharmaceuticals and Chemicals planning a Rs1.5bn greenfield facility in Shanghai by end of this year. CRAMS is expected to account for 85% of Dishman’s revenues by 2010, up from the current level of 75%.
Dr Reddy’s too expects to see CRAMS account for a bigger share of its revenue, moving up from 10% to 25-30% over the next three years.
But success will not be easy. The CRAMS business is littered with stiff but not insurmountable hurdles that will test the management skills of Indian companies.