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Active pharmaceutical ingredients are the components of any drug that produce the intended effects. APIs are mainly used in generic drug manufacturing. The rising generic drugs market, increased outsourcing of API manufacturing, and technological advancements in drug design and development are the key factors driving the growth of the global active pharmaceutical ingredients market.
The global API market is driven by the increasing demand for generics and biologics. APIs help reduce healthcare costs as generics are significantly cheaper than branded drugs. Further, the patent expiry of major blockbuster drugs and rising incidence of chronic diseases are also augmenting the demand for APIs. Technological advancements in process development and analytical methods have improved process efficiency and productivity in API manufacturing. This has encouraged pharmaceutical companies to outsource API production to specialized contract manufacturing organizations for reduced costs and improved quality.
The Global Active Pharmaceutical Ingredients Market is estimated to be valued at US$ 249.3 Bn in 2024 and is expected to exhibit a CAGR of 6.1% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the Active Pharmaceutical Ingredients market are Teva Pharmaceutical Industries Ltd., Pfizer, Inc., Dr. Reddy’s Laboratories Ltd., Novartis AG, Mylan N.V., Amneal Pharmaceuticals LLC, Lonza Group, Lupin Limited, Fresenius Kabi, Hikma Pharmaceuticals, Cipla Limited, Glenmark Pharmaceuticals Limited, Sun Pharmaceutical Industries Ltd., Endo International plc, Aurobindo Pharma Limited, Apotex Inc, Taro Pharmaceutical Industries Ltd, Stada Arzneimittel AG, Krka Pharmaceuticals, CordenPharma International, Evonik Industries AG, and Biological E. Limited.
The key opportunities in the API market include increasing collaboration between API manufacturers and drug makers, technology transfer to emerging markets, and development of niche APIs for orphan drugs and biosimilars.
Technological advancements such as continuous manufacturing, advanced chromatography, and artificial intelligence-based process optimization are helping improve API production efficiency and quality. This is expected to boost API production volumes over the forecast period.
Market Drivers
The key driver for the active pharmaceutical ingredients market is the patent expiry of major blockbuster drugs leading to increased generic drug production. This is resulting in higher demand for API. Another major factor fueling the market growth is the rise in chronic diseases globally. Furthermore, benefits such as reduced costs offered by API production outsourcing to contract manufacturers is propelling market expansion.
Challenges in Active Pharmaceutical Ingredients Market
The Active Pharmaceutical Ingredients (API) market faces various challenges including price fluctuations of raw materials, compliance with stringent regulations, and maintaining quality standards. Raw material costs account for a major portion of API production costs. Prices of key starting materials often witness volatility due to political and economic uncertainties. Moreover, stringent regulations framed by the US FDA and other regulatory authorities across regions have increased compliance requirements for drug manufacturers. Frequent regulatory changes necessitate upgraded production facilities and quality systems. Ensuring consistent quality of APIs amid expanding production capacities is also a notable difficulty for players in this market. Sustaining research capabilities for developing novel APIs further adds to the challenges.
SWOT Analysis
Strength: Presence of several large players with extensive manufacturing infrastructure and R&D capabilities. Growing demand for generic and biosimilar drugs also offers business opportunities.
Weakness: Heavy reliance on China and India for key starting materials limits procurement flexibility. High capital requirements for complying with evolving regulatory standards.
Opportunity: Expanding application scope into novel delivery systems and complex molecules. Emerging Asian and Latin American markets offer market expansion potential.
Threats: Threat ofsubstitutes from alternate drug formulation routes. Rising environmental protection laws could increase compliance burden.
Geographical regions with high Active Pharmaceutical Ingredients market concentration
North America currently captures over one-third of the global API market value owing to strong presence of large pharmaceutical companies and generic drug manufacturers in the US. Europe is another major regional market led by Germany, France, and the UK. However, the Asia Pacific region has emerged as the fastest growing market for APIs in recent years led by China, India, Japan, and South Korea. This is due to easy availability of skilled labor and raw materials at lower costs, driving several large pharmaceutical companies to set up API manufacturing facilities in these regions.
Fastest growing region for the Active Pharmaceutical Ingredients market
The Asia Pacific region stands out as the fastest growing market for Active Pharmaceutical Ingredients globally over the forecast period from 2024 to 2031. This is attributed to rising pharmaceutical exports from India and China, increasing domestic drug consumption in developing Asian countries, favorable government policies supporting the generics industry, and growing investments by international API companies to leverage lower production costs. Furthermore, Asia represents nearly 60% of the global population, suggesting immense future market potential. All of these factors will likely propel Asia Pacific to become the dominant regional market for APIs globally by 2031.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
