PolyPeptide Group AG has shortlisted EQT AB and IDG Capital for the next round of bidding on its Swiss contract drugmaking business, according to people familiar with the matter. The move narrows a field that has drawn multiple private equity suitors, reflecting strong appetite for contract manufacturers in the pharma supply chain.

Contract drugmakers appeal to PE firms for their recurring revenue and long-term client agreements with pharmaceutical companies. PolyPeptide's progression to a shortlist signals the asset remains attractive in an environment where drugmakers increasingly outsource production. EQT, a major European buyout firm, and IDG Capital, a Beijing-based investor with healthcare exposure, now face off.

Neither firm has publicly disclosed its valuation expectations. The bidding process will test how much PE capital is willing to pay for contract manufacturing assets during this wave of pharmaceutical outsourcing. PolyPeptide's selection of these two investors marks a critical juncture in the sale.