Mumbai, Nov. 29 -- The Street is gravitating toward speciality chemical manufacturers that supply contract development and manufacturing organizations (CDMO) and active pharmaceutical ingredient (API) makers, as uncertainty looms over the chemicals sector. The reason, according to experts, is that suppliers to pharma firms enjoy clearer growth visibility, far less competition, and stronger margins than industry-linked speciality and agro-chemical businesses that dominate India's chemicals landscape. CDMO intermediates need complex synthesis, rigorous regulatory scrutiny, and long qualification cycles. The natural barriers limit competition and strengthen long-term customer relationships, Vikash Agarwalla, managing director and partner at global consulting giant Boston Consulting Group, said. Growth in businesses serving pharma CDMOs is inherently slow, as companies enter into contracts early in a drug's discovery phase and grow with molecule, said Deepak Jain, chief executive and managing director of Jubilant Ingrevia. "It's a game of patience, but a high-margin, sticky business." This gives CDMO suppliers stronger pricing power and better earnings visibility than commodity-style speciality chemicals businesses, he said. Mint's September-quarter earnings analysis also shows the trend. A pack of 10 pharma-linked speciality chemical and CDMO-adjacent firms posted about 7% year-on-year growth in sales, outpacing the non-pharma cohort's modest 4% uptick in Q2FY26. "Pharma-linked chemical firms are growing off a low base, supported by three big CDMO tailwinds: geopolitical shifts, supply-chain diversification, and tightening capacity overseas," said Agarwalla. Ergo, pharma-linked speciality chemical sales climbed for three straight quarters, while the wider chemicals pack has slowed, Mint's analysis showed. As a result, net profit for pharma-linked firms jumped 46% on-year, but helped by higher non-core income, while the non-pharma group managed only a 9% rise. Experts attributed this performance gap to India's rapidly expanding CDMO ecosystem that drives sales growth for its chemical suppliers. Nuvama Institutional Equities noted that the CDMO segment grew the fastest in its pharma portfolio, at 23% on- year in Q2. This was driven by a doubling of Neuland Laboratories' custom manufacturing services business, with Divi's Laboratories and Jubilant Pharmova also recording 23-28% growth in contractual development and manufacturing services. Moreover, with India holding just 2-3% of the $145-billion global CDMO market, according to a February Boston Consulting Group report, Agarwalla sees ample headroom for expansion....