Active Pharmaceutical Ingredients Market Size, Share & Growth Analysis, By Synthesis (Biotech, Synthetic), By Type (Generic API, Innovative API), By Type of Manufacturer (Captive, Merchant), By Application (Cardiology, CNS & Neurology, Nephrology, Ophthalmology, Pulmonology, Gastroenterology, Oncology, Endocrinology, Others) - Global Industry Analysis, Trends, Regional Outlook and Forecast 2023 - 2032

The global active pharmaceutical ingredients market size was valued at USD 204.04 billion in 2022 and it is expected to be worth around USD 363.68 billion by 2032 and expanding at a CAGR of 6.1% over the forecast period 2023 to 2032. U.S. active pharmaceutical ingredients market was valued at USD 34.90 billion in 2022.

The active elements in a pharmaceutical medicine that have the desired impact on the body to treat a condition are known as active pharmaceutical ingredients (APIs). Chemical substances are processed to create APIs. The active component of a biologic medication is referred to as a bulk process intermediate. Due to the rising incidence of chronic diseases including diabetes, asthma, and cancer, the API market has seen some appealing potential despite high manufacturing costs, rigorous regulatory laws, and policies in many countries restricting medicine prices.

Key Takeaway

• By type of manufacturer, the captive API segment has garnered highest revenue share of over 59.5% in 2021. 
• By type, the innovative APIs segment accounted 66.4% revenue share in 2021. 
• By application, the cardiovascular diseases segment exhibited 19.7% revenue share in 2021. However, the oncology segment is growing at a CAGR of 8.5% over the forecast period.
• By type of synthesis, synthetic API segment accounted 73% market share in 2021. However, the biotech segment is growing at a CAGR of 7.4% over the forecast period.
• North America region hit revenue share of over 39.5% in 2021
• Asia Pacific region is growing at a highest CAGR of around 7.4% from 2022 to 2030. 

Growth Factors

Global active pharmaceutical ingredients market is estimated to be influenced by a great number of ground-breaking drugs going off patent during coming years. There is forthcoming need for technological inventions to preserve the viability in high volume and a small value environment. In the event of outsourcing, APIs are facing rigorous guidelines and oversight from the nation they are shipped to. For instance, API manufacturing plants abroad still go over scrutiny by the U.S. Food & Drug Administration.

Rising acceptance of quality standards in API manufacturing including Good Manufacturing Practices (GMP), and the worldwide implementation of International Conference on Harmonisation (ICH) guidelines have aided recover the safety criterions. Conversely, the API industry is coming across the issues including plunging the cost of development, curbing the development time, refining the process design and addressing the quality standard deprived of compromising on the cost-effectiveness.

COVID-19 LANDSCAPE: PRE-COVID ANALYSIS

Before the COVID-19 pandemic began, the healthcare industry was growing at an exponential level all over the world. The IDF Diabetes Atlas 9th edition indicated a continuous global rise in diabetes prevalence. According to this Report, around 463 million adults in the age group of 20-79 years were living with diabetes in 2019. This count is anticipated to increase to approximately 643 million by the end of 2030 and 783 million by 2045. Diabetes alone amounted to at least $ 966 billion in health expenditure, which is a rise of 316 % in the last 15 years. In 2019, as per the World Malaria Report by the World Health Organization (WHO), 229 million cases of malaria were recorded all over the world. The WHO African Region recorded around 215 million malaria cases in 2019, which accounted for approximately 94% of the cases. API such as Hydroxychloroquine sulfate is useful to reduce inflammation in treating rheumatoid arthritis and lupus. Dihydroartemisinin is preferred as an intermediate in the preparation of many artemisinin-derived antimalarial drugs. Thus, even before the COVID-19 pandemic, the requirement for various active pharmaceutical ingredients was increasing owing to the increasing prevalence of diseases and propelling count of affected individuals across the globe.

POST COVID-19 ANALYSIS

The pandemic of COVID-19 impacted the global APIs market positively. The pharmaceutical sector proved to be an epicenter for treatment of symptoms related to COVID-19, including cough, high fever, and cold. Active pharmaceutical ingredients (API) prices of certain basic pain and fever relief drugs almost doubled as high as to 130% and major life-saving drugs have witnessed a rise of around 120% recently. As per Gaurav Kaushik, Managing Director, Meteoric Biopharmaceuticals Pvt Ltd., expressed that the price hike has resulted in total dependency on imports from China. As of July 2021, raw material prices for essential drugs such as APIs saw a drastic rise of 140%. 

In India in May 2021, the production capacity of Remdesivir was increased from 3,800,000 vials per month to nearly 11,900,000 crore vials per month, as per the Ministry of Chemicals and Fertilizers. According to the Ministry of Health and Family Welfare, Government of India, around 2,19,97,17,471 COVID-19 vaccine doses were administered in India. As of December 7, 2022, around 392 million doses of the Pfizer-BioNTech COVID-19 vaccine were administered in the United States of America. Owing to the increased popularity of the pharmaceutical sector during the pandemic, overall, the active pharmaceutical ingredients (API) market experienced growth during the period.

COVID-19 IMPACT: GLOBAL MAJOR GOVERNMENT POLICY

The American Rescue Plan planned to allocate funding of $ 350 billion due to emergency for eligible local, state, tribal, and territorial governments to respond to the COVID-19 situation and bring back the lost jobs. As part of the 2020 Annual Capital Expenditures Survey (ACES), it was found that 6.0 percent of companies canceled, 8.2 percent decreased, 9.7 percent postponed, and 1.5 increased some of their budgeted capital expenses in the midst of the coronavirus pandemic.

On 31st January 2020, a Public Health Emergency (PHE) Declaration was issued by the Health and Human Services Secretary due to the COVID-19 pandemic. During such public health emergency, drug manufacturers were mandated to review the current good manufacturing practice (CGMP) regulations and recommendations with respect to the restriction of sick employees from operation areas. Drug manufacturers were also required to review CGMP recommendations and requirements related to equipment and facility cleaning and sanitation. Companies were also needed to ensure that materials, drug product containers and closures, components, active pharmaceutical ingredient (API), drug products, and in-process materials are safe and meet the mandatory quality requirements. The Food and Drug Administration (FDA) issued directions for cleaning and sanitizing non-production areas such as elevators, offices, changing rooms, break rooms, and restrooms from time to time. According to The Economic Times, the Government of India restricted the export of various hormones, antibiotics, and vitamins, anticipating a shortfall of these medicines with a rapid increase in the number of COVID-19 cases.

MARKET TRENDS AND OPPORTUNITIES IN THE COVID-19 LANDSCAPE

Scientists found a list of respective compounds that target COVID-19. There were around 45 molecules in preclinical development and 155 compounds in clinical trials for combating COVID-19. 4 vaccines have been repurposed for treatment against COVID-19, including Hydroxychloroquine, Chloroquine, Remdesivir, and Lopinavir & Ritonavir. Based on the projections, Pfizer Inc. estimated that it will produce around 50 million COVID-19 vaccine doses in 2020 and approximately 1.3 billion doses in 2021. Such high production of COVID-19 vaccines created lucrative opportunities for the pharmaceutical market during the pandemic. India had the opportunity to supply vaccines to various countries of the world. Among the ‘Made-in-India’ vaccines that impacted the healthcare industry, the Serum Institute of India’s (SII) Covishield accounted for approximately two-thirds (66.63%) of the total supplies. Thus, the pandemic of COVID-19 had created lucrative opportunities for the active pharmaceutical market in various countries.

Report Scope of the Active Pharmaceutical Ingredients Market

Type of Synthesis Insights

The global active pharmaceutical ingredient market has been classified depending on type of synthesis into synthetic and biotech. Biotechnology has further been categorized into vaccines, recombinant proteins, and monoclonal antibodies.

In 2022, synthetic segment conquered the global API market due to the stress-freeobtainability of raw materials and easier processes for the synthesis of APIs. Growth of biotech segment is recognized due to technological innovations in the manufacturing method and a high level of competence of these molecules. The growing demand for generic drugs is one of the key factors driving the segmental growth of the market. Companies that manufacture synthetic APIs see significant revenue from APIs for generic drugs. Wide-ranging opportunities are now being created for CDMOs operating in the segment. With corporations looking to maximise profitability by lowering production costs, the opportunity in the market for synthetic APIs for CDMOs has grown even more profitable. The market's growth is also related to the low cost of manufacturing associated with small molecules and their great effectiveness. Around 78% of all APIs, which make up the vast majority of the drugs, are small molecules. This increases the demand for finished products and API formulation, which fuels the growth of the synthetic API segment.

Further, the growth of the biotech segment is anticipated to augment due to the rising demand for biopharmaceuticals and their capacity to treat diseases that were previously incurable. Five medications, including galantamine, rivastigmine, donepezil, memantine, and memantine in combination with donepezil (Namzaric), have been approved by the FDA for the treatment of Alzheimer's disease, as per the Alzheimer's Association 2021 report. Additionally, it also anticipated that by the year 2050, 13.5 million Americans aged 65 and older will be living with Alzheimer's disease, up from an estimated 6.2 million in 2021. In the upcoming years, it is expected that the patient population's demand for biotech APIs would increase as a result of the increasing prevalence of these diseases.

Global Active Pharmaceutical Ingredient (API) Market Revenue, By Type of Synthesis, 2021-2030 (US$ Billion)

Type Insights

On the basis of type, the API market is categorized into generic and innovative APIs.

Innovative APIs

In 2022, innovative APIs lead the global market on account of existence of promising government guidelines, recognized R&D facilities, and augmented subsidies for innovative drug development. Due to widespread research in this field, numerous novel ground breaking products are in the pipeline and are estimated to be introduced during years to come. Ongoing research and development in the field of innovative APIs are exhibiting a large number of innovative products in the pipeline that is expected to be marketed in the upcoming years. For instance, Glenmark is currently engaged in R&D with a new molecule named Ryaltris- GSP 301 intended for the treatment of allergic Rhinitis. Satisfactory regulatory guidelines for R&D innovation centers as well as increased expenditure are propelling the growth of the innovative APIs segment. The introduction of emerging market players and increasing regulatory agency support for new medication clearance is expected to aid market expansion, which may be due to the government's increased attention on healthcare and pharmaceuticals as a result of COVID-19.

In addition to this, the extensive need for targeted treatments including high-potency API molecules, such as HPAPI, is expected to drive even more demand for customized medications. Such innovations in the development of pharmaceutical drugs are expanding the growth of innovative APIs. Furthermore, because of the requirement for low doses and fewer side effects, oncology is a major domain for high-potency novel API medicines. As a result, the majority of HPAPIs are found in anticancer medications. These APIs have also been utilized to treat hormonal imbalances, musculoskeletal, cardiovascular, and CNS medications, as well as glaucoma.

Generic APIs

Generic APIs are the same chemical substances used in drugs that were formerly covered by chemical patents. Generic APIs can be sold in the market only after the expiration of patented original drugs. The active pharmaceutical ingredient (API) in a generic medicine is identical to the original drug, but there are modifications in other aspects such as manufacturing method, formulation, taste, colour, excipients, and packaging. According to FDA, generic APIs are generic drugs that must be similarly effective as their branded medicines and hence they must be possessing similar risks and benefits associated with them.

The percentage of prescriptions for generic pharmaceuticals has increased as a result of the rising approval rates by Abbreviated New Drug Applications (ANDA). This is attributable to the introduction of generic players across therapies and the loss of exclusivity for patented drugs over the past 10 years. Additionally, rising demand for injectable generics is anticipated to promote market segment growth. Owing to the benefits that generic injectable provide in terms of quality, dosage, strength, and a more affordable R&D cycle, governments are funding their production. Other reasons influencing the market's growth include the increasing frequency of drug shortages, particularly in the US, an ageing population, and an increase in chronic and lifestyle disorders. The number of generic drug launches is also increasing. For instance, in March 2022, Natco Pharma in collaboration with Arrow International announced the launch of the first generic version of Celgene's Revlimid drug which is a top selling cancer drug in the US market.

Rising technological advancements in API manufacturing and rising awareness about the importance of generic APIs are some of the factors augmenting the growth of the generic API segment. Low costs associated with generic APIs along with the same quality and same way of consumption is some of the prominent factors propelling the growth of the generic API segment.

Global Active Pharmaceutical Ingredient (API) Market Revenue, By Type, 2021-2030 (US$ Billion)

Type of manufacturers Insights

Among different types of manufacturers involved in the API market, Captive API occupied majority of the revenue shares because of stress-free obtainability of raw materials and thorough capitalization of foremost key companies for the progress of high-end manufacturing facilities. Merchant API is projected to be the fastest-growing sector during years to come. The segment development is compelled by influences like high cost of in-house engineering of these molecules and increasing demand for biopharmaceuticals.

Global Active Pharmaceutical Ingredient (API) Market Revenue, By Type of Manufacturer, 2021-2030 (US$ Billion)

Application Insights

APIs find widespread application in CNS and neurology, oncology, orthopedic, cardiology, pulmonology, ophthalmology, gastroenterology, endocrinology and nephrology among others. In 2022, cardiology occupied major share of the market due to escalating commonness of target diseases internationally. As per the WHO, cardiovascular diseases may result in about 17.9 million deaths per year, worldwide, where 85.% of these deaths are instigated by heart attacks and strokes.

Regional Insights

Geographically, North America dominated the global API market closely trailed by Europe. The foremost influences motivating the whole growth of the market in this are budding incidence of chronic diseases, cumulative government emphasis on generic drugs, intensifying demand for specialty drugs and biologics, and technological progressions in the manufacturing processes of APIs. Asia Pacific is expected to record fastest growth in the market throughout the estimate period. This growth is attributed to efforts of foremost corporations in the market for setting up API business plants in emerging nations such as India and China.

North America held largest share in the global active pharmaceutical ingredient (API) market. The U.S. held largest share followed by Canada and Mexico. The development in the active pharmaceutical ingredient (API) market is attributable to the rising expenditure on healthcare across the region. The rising prevalence of chronic diseases along with increasing government initiatives supports the creation of novel medicines and is also expected to accelerate the development of active pharmaceutical ingredients in North America.

The growing demand for biologic active pharmaceutical ingredients (API) in the region due to the patients' quick adoption of biologic medications for the treatment of various chronic illnesses is also driving the regional growth of the market. For instance, the Alzheimer's Association estimates that 6.2 million Americans over the age of 65 already have Alzheimer's disease, and the count will rise to 12.7 million by the year 2050. This boosts the demand for donepezil, a synthetic active pharmaceutical ingredient that can be utilized in pharmaceutical preparation for treating Alzheimer’s disease. As a result, the prevalence of this chronic disease issue has augmented the growth of this market in the North American continent. The rising obesity rates across the U.S. are creating major market opportunities for the growth of the market. As per the 2021 National Health Statistics Report, the prevalence of obesity was 19.7% between 2017 to March 2020 among children and adolescents aged 2–19 years. The age-adjusted prevalence of obesity was 41.9% among adults aged 20 and over, severe obesity was 9.2%, and diabetes was 14.8%. Among adults aged 18 and over, the age-adjusted prevalence of hypertension was 45.1%. This has resulted in an increase in demand for active pharmaceutical ingredients which in turn has resulted in the growth of the active pharmaceutical ingredient (API) market in the region.

The active pharmaceutical ingredient (API) market in Canada is expected to grow owing to the presence of companies that are involved in the development and manufacturing of inventive medicines and generic medications, as well as over-the-counter drugs. Additionally, an increase in the prevalence of chronic diseases among Canadians and the comorbidities linked to the illnesses are projected to have a beneficial effect on the expansion of the active pharmaceutical ingredient (API) market during the forecast period. For instance, according to the Public Health Agency of Canada analysis, among the top chronic diseases and conditions most prevalent among Canadians are hypertension, ischemic heart diseases (IHD), osteoporosis, asthma, diabetes, chronic obstructive pulmonary diseases, and cancer. This will increase the demand for pharmaceutical products and is further likely to support the growth of the active pharmaceutical ingredient (API) market.

Global Active Pharmaceutical Ingredient (API) Market Revenue, By Region, 2021-2030 (US$ Billion)

Asia Pacific is projected to grow at the fastest with a CAGR of 6.3% during the forecast period. China dominated the Asia Pacific region followed by India and Japan. The pharmaceutical and contract manufacturing industries are expanding in various countries, including China and India, and this is projected to fuel the growth in the Asia Pacific market. Due to factors such as accessibility of production- ready raw materials and cheaper labour costs, these countries are emerging as desirable locations to outsource the manufacturing of active pharmaceutical ingredients as well. Additionally, the region's favourable regulatory framework is enticing many manufacturers to increase their production capacity which is expected to fuel the market's growth in the region. Further, organizations are undergoing digital transformation through Manufacturing 4.0 with capabilities to ensure good manufacturing practice (GMP) compliance. Additionally, the rising life expectancy along with lifestyle and dietary changes contribute to more non-communicable diseases and are expected to increase in demand for pharmaceutical drugs and hence active pharmaceutical ingredients in the region.

Also, the Made in China 2025 initiative emphasizes on the biotechnology and pharmaceutical sectors to help China become a high value-add economy. China has completely redesigned its healthcare system with the Volume-based Procurement (VBP) policy and National Reimbursement Drug List (NRDL). The major objective is to give consumers more widespread access to high-quality medications at less cost. The need for higher-quality medications will also increase with rising consumer wealth in the future years. The government places more emphasis on the increased production of copyrighted medicines and increased innovation. The above- mentioned factors are expected to fuel the active pharmaceutical ingredient demand across the economy.

The Indian active pharmaceutical ingredient (API) market is expected to grow owing to a surge in generic drug exports. India emerged as one of the most attractive locations not only for investments but also for doing business. India jumped 79 positions from 142nd in 2014 to 63rd in 2019 in the ‘World Bank's Ease of Doing Business Ranking 2020’. India is one of the largest providers of generic drugs. The increasing percentage of heart disease and the growing pharmaceutical industry are anticipated to drive industry growth and competitiveness in the country. Further, the pandemic spurred Indian drug producers to significantly increase their R&D expenditure. In order to reduce their reliance on Chinese deliveries, Indian drug producers worked towards increasing the local production of Active Pharmaceutical Ingredients (APIs). These factors are likely to augment the growth of the active pharmaceutical ingredient (API) market.

Key Companies & Market Share Insights

Pfizer is one of the foremost players in the global API marketplace. This prominent position of the corporation is majorly accredited to its comprehensive product offerings. The company has a robust brand imagethat offers it a competitive edge over other companies. To endure competitive position and reinforce its market position, the firmlargely focuses on implementing both organic and inorganic growth approaches including partnerships, agreements, collaborations, product endorsements, and acquisitions. In accordance with this, Pfizer acquired Anacor Pharmaceuticals, Inc. (US), a principal biopharmaceutical corporation developing small molecule therapeutics in June 2016.

Increasing numbers of players are subcontracting to curtail costs on employees, costly equipment, and infrastructure. However, there is sustained anxiety regarding the quality of these APIs manufactured abroad. Particularly, AstraZeneca Pharmaceuticals used to operate numerous manufacturing hubs in the U.S. Currently, only 15% of their APIs are generated in the U.S. and there are plans to end that small fraction and subcontract all manufacturing abroad. 

Some of the noteworthy companies in the active pharmaceutical ingredient market include:

• Albemarle Corporation
• AurobindoPharma
• Reddy’s Laboratories Ltd.
• AbbVieInc
• Teva Pharmaceutical Industries Ltd
• Mylan N.V.
• CiplaInc
• BoehringerIngelheim International GmbH
• Merck & Co., Inc
• Sun Pharmaceutical Industries Ltd
• Bristol-Myers Squibb Company

Segments Covered in the Report

This research report includes complete assessment of the market with the help of extensive qualitative and quantitative insights, and projections regarding the market. This report offers breakdown of market into prospective and niche sectors. Further, this research study calculates market revenue and its growth trend at global, regional, and country from 2023 to 2032. This report includes market segmentation and its revenue estimation by classifying it on the basis of Type of synthesis, type, application, type of manufacturer, and region as follows:

By Type of Synthesis

• Biotech
  • Monoclonal Antibodies
  • Recombinant Proteins
  • Vaccines
• Synthetic

By Type of Manufacturer

• Captive APIs
• Merchant APIs
  • Generic APIs
  • Innovative APIs

By Type

• Generic APIs
• Innovative APIs

By Type of Drug

• Prescription Drugs
• Over-the-counter Drugs

By Application

• Cardiovascular Diseases
• Oncology
• CNS & Neurological Disorders
• Orthopedic Disorders
• Endocrinology
• Pulmonology
• Gastrointestinal Disorders
• Nephrology
• Ophthalmology
• Others

By Regional Outlook

• North America
  • U.S.
  • Canada
• Europe
  • U.K.
  • Germany
  • France
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
• Middle East & Africa
• Latin America