Tube Investments of India Ltd, a part of the Chennai-based Murugappa group, will foray into the contract development and manufacturing business as it looks at new platforms to complement the existing business for its future growth.

N Govindarajan, former Managing Director of Aurobindo Pharma, will be the CEO of the new subsidiary, which will focus on active pharmaceutical ingredients (API) and other products.

The company proposes to invest up to ₹285 crore into this subsidiary in the form of equity and compulsorily convertible preference shares in tranches. Govindarajan will invest up to ₹15 crore in equity and compulsorily convertible preference shares in tranches. Subject to the performance and other terms and conditions specified in the agreement, he will be entitled to get up to 25 per cent of the equity for his investment, says an announcement by Tube Investment to the National Stock Exchange.

Contract development and manufacturing organisation (CDMO) is one of the fastest growing segments in the pharmaceutical industry as big pharma players are increasingly outsourcing R&D and manufacturing to focus on core business activity. Indian companies are building their skill set to cater to biologics and synthesis-based CDMO. India is expected to grow significantly in CDMO and is emerging as a preferred destination due to its cost advantages and talented pool of skilled labour, the announcement said.

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