Next-Gen CDMOs: Keeping Pace With Industry Change

For Krishna Kanumuri, CEO and managing director of Sai Life Sciences, his mission and focus for the company is clear: demonstrate that an Indian contract development and manufacturing organization (CDMO) can scale globally while keeping pace with the industry’s rapid transformation.

After all, like many leaders in the contract support space, he recognizes that as large pharma increasingly diversifies supply chains in a “China+1” strategy, CDMOs in India are stepping into a new era of opportunity. One that also comes with challenges around regulatory compliance, talent retention, and the readiness to tackle new therapeutic modalities and the advent of artificial intelligence (AI)—which are changing how development and manufacturing partners deliver speed and quality.

In the below interview with Pharmaceutical Executive, Kanumuri discusses the forces reshaping the global CDMO landscape amid this convergence—and the CEO’s leadership philosophy in guiding Sai’s evolution.

Based in Hyderabad, India, the company also has operations in the US (Boston; primary discovery and biology focused) and the UK (Manchester; process and development). Kanumuri joined Sai in 2004 as head of business development, and was one of just 30 employees at the time. Today, its workforce totals 3,500.

A chemical engineer with a major in finance, the India-native Kanumuri came to the US in the early 1990s, attending the University of Kansas School of Business. He worked in the telecom field for seven years in San Diego before shifting gears to the pharma world.

The following are excerpts from the conversation with the CEO, edited for length and clarity.

Pharm Exec: With pharma companies increasingly diversifying their supply chains, what are the biggest trends reshaping the global CDMO landscape today, particularly in India?

Kanumuri: Setting aside the Biosecure Act, I think it goes without saying that just the geopolitical tensions themselves have changed the playing field even further. People have realized that they have to diversify as a supply chain.

So I think what we're seeing is India is coming from a standpoint of being a tactical supplier to [more of] a strategic supplier. We're seeing companies taking longer-term views on India and kind of figuring out, “How do we pick partners? How do we work with them?” And how do you actually build the capabilities as, in fact, the internal system themselves are evolving very significantly in pharma right now? They are themselves on a significant journey in terms of refining both their R&D and manufacturing operations. I think there’s a group of companies who are adaptable, who have the right values and infrastructure to be able to grow with them, so to speak.

I think we're in a good position at this point. India offers, at least, the cost piece, which is similar to China, and also the skilled manpower on a reasonable scale, as a good alternative to China going forward. The trends are positive, but there's a lot of hard work to be done—there's a steep hill to climb for us in terms of catching up from behind where China has been for the last 15 years.

Pharm Exec: How much are the geopolitical tensions globally ratcheting up the need for new strategies in your sector?

Kanumuri: That’s the reality, right? Nobody is going to be single [partner]-dependent anymore. Everybody's going to have diversified supply chains at this point.

Pharm Exec: Where is your company placing the most emphasis—new geographies, new capabilities, or scaling existing operations?

Kanumuri: We will go where there is talent and technology. We have a global approach, but our approach is not to build capacity globally. It is to access capability globally, depending where the talent is. I think what we will do is probably look at [additional] technology overseas and maybe search for more manufacturing [talent] as well, depending on expertise. But we continue to scale up our capability in India.

We want to build scale on top of technology, not build scale first. So we're taking a technology-driven scale approach.

Pharm Exec: Is there a specific technology component that Sai is looking to build and drive these efforts?

Kanumuri: If you look at the majority of modalities at this point—peptides and oligonucleotides, also ADCs (antibody-drug conjugates)—80% of the work that goes there is really small-molecule dependent. So we are playing in all those modalities, which have significant potential.

Our goal is to do end-to-end support. The only areas we are not going to be in at this point are cell and gene therapy, for the time being, and in vaccines. We're really building out to be an end-to-end multimodality player going forward.

Pharm Exec: What’s the toughest hurdle Indian CDMOs face in competing at global scale, and how is Sai tackling it?

Kanumuri: We are starting about 15 years behind China in terms of scale. That's the biggest challenge. The challenge is time—and I think what China has done probably in 15 or 20 years, we have to do in five. The biggest challenge is going to be how quickly can we ramp up both in terms of capability and scale.

I think the advantage we do have is that we have been doing this for a long period of time. We have the fundamental capabilities and also our pharma partners have worked in China for a significant amount of time. They know what good looks like, so that probably helps shorten that window.

I think there are enough levers, which, together, can make this [journey and effort] successful. Even though it’s a shorter time frame, I think there's enough learnings on both sides that should potentially accelerate this.

Pharm Exec: Is the task extra challenging amid today’s global regulatory environment, as far as compliance and other factors as you are ramping up?

Kanumuri: I think the perception of compliance risk is somewhat outdated. People still talk about compliance in India as if it were 20 years ago, but that’s no longer the case. Good Indian companies today are as compliant as any in the West, and often operate under greater scrutiny. So, I don’t see quality as a concern—certainly not for players in the CDMO sector.

Pharm Exec: What about the talent-and-culture mix in the equation? How do you zero in on boosting your talent and your culture—internally or in what you're looking for from your clients?

Kanumuri: I think we are tapping talent globally—having a presence in the UK and the US, being in India. But we also have to understand that the world is changing. We have to understand that AI is going to be playing a more prominent role the next two to three years. So how the life sciences job market will evolve is going to be a question mark. I think there’s going to be a substantial change in terms of the requirements, and maybe you have less managers and more real science people who are focused a lot on the science. Maybe a much better environment for technicians to execute on ideas.

I think right now we're trying to figure out what the type of talent will be, which can serve both today and which will be relevant even three years out. This is not, unfortunately, a time where you can definitely say this is exactly what we're looking for. Everybody is trying to figure out what the world will look like in two to three years, as we get more digitally enabled and AI enabled. We believe that AI is not a threat, but I think it changes how we operate, and we need people who like to operate in that environment.

Pharm Exec: Given these evolving dynamics, what’s the guiding principle that drives your leadership and company culture through the wider industry/sector transformation?

Kanumuri: I think the basic culture you want is a group of people who really want to be world-class, who are independent operators. What we really try to do is get people with vision, who like to build things at a world-class level, and give them the freedom to operate and the resources that will help them succeed.

Our success has always been about going after big goals, finding ambitious people, and giving them the room to operate and to grow. At the same time, our fundamentals are very solid. We always believe that the basics are the most important thing. If you get your basics right, when things go wrong, you’re going to recover quickly. When the fundamentals are wrong, that's where you get in trouble.

We don't chase the short-term, be it with ethics, be it in terms of environmental compliance, be it in terms of regulatory compliance, be it in terms of employee safety. We take our basic foundations very, very seriously, and that has really served us well long-term. Foundational values with the right quality people make all the difference.