Active Pharmaceutical Ingredient Market Overview

The global Active Pharmaceutical Ingredient market is projected to reach USD 270.01 billion by 2030 from USD 160.36 billion in 2020, at a CAGR of 6.9 % from 2023 to 2030.

Active Pharmaceutical Ingredient (API) is the primary component in the manufacturing of pharmaceutical drugs that provides the desired therapeutic effect. APIs can be either synthetic or naturally derived and can be small molecules, proteins, peptides, or nucleic acids. They are responsible for treating or preventing specific medical conditions and are used in various drug formulations. The quality, purity, and safety of APIs are crucial factors in the production of safe and effective drugs002E.

APIs are produced through complex chemical processes that involve multiple steps, including synthesis, extraction, and purification. The process of producing APIs must meet strict quality control measures, and it is subject to stringent regulatory requirements to ensure that the final product is safe and effective for human use. APIs can be derived from natural sources, such as plants, animals, or microorganisms, or they can be synthetically produced in a laboratory. They can be small molecules, peptides, proteins, or nucleic acids, depending on the intended therapeutic use.

The rising demand for generic medications is one of the primary reasons. The rising frequency of chronic illnesses, along with rising healthcare expenses, has increased demand for low-cost medicines. APIs are critical components in the creation of generic pharmaceuticals, which are a less expensive alternative to branded treatments. Technology advances are another driver of the API industry. Synthetic biology, gene editing, and bioprocessing advancements have resulted in the development of novel APIs with enhanced effectiveness and safety profiles.

The high cost of research and development (R&D) developing new APIs is one of the key constraints. Developing new APIs necessitates substantial expenditure in research and clinical trials, and bringing a novel API to market might take years. This high R&D expenditure may hinder new market entrants and raise manufacturing costs for existing market entrants. The rising regulatory requirements for API production are another constraint in the API business. To assure the quality, safety, and efficacy of APIs, regulators across the world have adopted tougher requirements for their manufacturing, testing, and approval. Compliance with these rules can be time-consuming and expensive for API makers, thereby increasing manufacturing costs and limiting the availability of particular APIs.

The growing desire for personalized treatment is one of the key opportunities. Personalized medicine is the practice of personalizing medicines to individual patients based on genetic composition, lifestyle, and other characteristics. APIs are critical in the development of personalized medicine, and the API industry is predicted to grow considerably as the need for personalized therapies rises. The increased emphasis on biologics is another possibility in the API business. Biologics are complex compounds created by living organisms that are used to treat a variety of ailments such as cancer, autoimmune disorders, and infectious diseases.

Growth Drivers

The increasing global burden of chronic illnesses due to urbanization, an elderly population, and sedentary lifestyles is driving a strong demand for therapeutic medications. The Indian pharmaceutical industry has met 40% of the demand for generic brands in the US, 25% of all medications, and numerous vaccinations, according to the Indian Brand Equity Foundation (IBEF).

China's pharmaceutical sector is expanding rapidly, driven by increased demand for novel pharmaceuticals, including biological therapeutics, due to the changing complexity of chronic diseases and the frequency of new cases. The market is expected to grow due to the import of unprocessed pharmaceutical materials from underdeveloped nations for biopharmaceutical products. Additionally, the market for active pharmaceutical ingredients is expected to rise due to the increasing emphasis on research and development for novel pharmaceuticals.

Restraints

The market expansion in emerging markets is expected to be hindered by unforeseen changes in medication pricing rules, particularly in China, where most manufacturing businesses are located. This is due to the developed areas' reliance on China for active ingredient manufacturing, which could lead to unexpected adjustments in China's pricing policy.

Segment Analysis

The global Active Pharmaceutical Ingredient market is segmented by business mode, synthesis type, type, application and region.

Based on business mode, the market is divided into captive API, merchant API. The captive API category is the market's largest contributor and is predicted to increase at a CAGR of 6.15% during the forecast period. The captive API component of the study includes of APIs utilized by pharmaceutical companies to create completed dosage forms on-site. APIs have historically been manufactured in the home countries of pharmaceutical corporations. To cut expenses, several corporations have recently resorted to outsource manufacturing. As a result, stronger restrictions and inspections have been put in place, dramatically altering the way these pharmaceuticals are governed. decline global economic development, greater pricing pressure from cost-cutting measures implemented by most countries, and rising competition from generic medications are all factors contributing to the market's decline.

Based on synthesis type, the market is classified into synthetic, biotech. The synthetic category accounts for the majority of the market and is predicted to grow at a CAGR of 5.70% during the forecast period. Active pharmaceutical substances are classified into two types based on their origin: synthetic chemical medications and natural chemical pharmaceuticals. Chemically synthesized chemicals are classified into two types: inorganic synthetic drugs and organic synthetic medications. Inorganic synthetic pharmaceuticals include inorganic substances such as magnesium trisilicate and aluminium hydroxide.

Based on type, the market is bifurcated into generic, branded. Branded APIs, which have traditionally been the largest category, are nevertheless increasing more slowly than generic APIs, which are the fastest-growing. The need for branded APIs has declined dramatically over time as the pharmaceutical business has consolidated and some well-known trademarks have gone off-patent. Generic APIs have witnessed a boom and are expected to continue rising gradually as more patents expire and generic production facilities increase internationally. Several hundred businesses manufacture APIs for innovative medications and generic pharmaceuticals, resulting in a highly fragmented industry.

Based on application, the market is segmented into cardiology, pulmonology, oncology, ophthalmology, neurology, orthopedic. The oncology segment is currently the largest in the API market. This is due to the high demand for cancer treatments and the increasing use of targeted therapies and biologics in cancer treatment. Additionally, the rise in the incidence of cancer worldwide has driven the growth of the oncology API market. The cardiology and pulmonology segments also hold a significant share of the API market. The high prevalence of cardiovascular and respiratory diseases, particularly in aging populations, has driven the demand for APIs in these therapeutic areas.

Active Pharmaceutical Ingredient Market Players

The global Active Pharmaceutical Ingredient market key players include Pfizer Inc., Novartis International AG, Sanofi S.A., Merck & Co., Inc., Boehringer Ingelheim GmbH, Teva Pharmaceutical Industries Ltd., Eli Lilly and Company, GlaxoSmithKline, Merck & Co., Inc., AbbVie Inc., Dr. Reddy's Laboratories Ltd., Sun Pharmaceutical Industries Ltd., Amgen Inc.

New Developments

Feb. 13, 2023: Eli Lilly and Company will supply its active pharmaceutical ingredient (API) for human insulin at a reduced price to International Agencies (Bangladesh) Ltd. (IABL) in an effort to increase patient access and improve affordability for high-quality insulin for nearly one million people living with diabetes in Bangladesh by 2030.

June 06, 2022: Pfizer Inc. announced that it will increase its commitment to US manufacturing with a $120 million investment at its Kalamazoo, Michigan, facility, enabling US-based production of its COVID-19 oral treatment, PAXLOVIDTM (nirmatrelvir [PF-07321332] tablets and ritonavir tablets).

Active Pharmaceutical Ingredient Market Regional Analysis

The Active Pharmaceutical Ingredient market by region includes North America, Asia-Pacific (APAC), Europe, South America, and Middle East & Africa (MEA).

North America is the largest revenue generator, with a market share of 39 %. The United States has the greatest pharmaceutical R&D spending in the world. It is also the most important market for completed dose formulations and bulk pharmaceuticals. The US market runs on free market principles, which aim to establish open trade regulations and prevent anti-competitive behavior. makers worldwide are under substantial cost pressure as a result of the FDA's major rise in regulatory requirements for API makers in the United States. The FDA has boosted the frequency with which it inspects international producers and organized teams to visit firms in certain countries. The API market in the United States is anticipated to expand significantly over the forecast period, despite pricing pressures and regulatory difficulties.

 The European region's active pharmaceutical ingredient industry is expected to increase significantly. This is attributable to a variety of causes, including increasing research funding and the presence of large market competitors in the region. The expansion of R&D programmers by pharmaceutical and biopharmaceutical businesses is projected to be a significant driver of this increase.

Segments Covered in Active Pharmaceutical Ingredient Market

Active Pharmaceutical Ingredient Market by Business Mode 

• Captive API
• Merchant API

Active Pharmaceutical Ingredient Market by Synthesis Type, 

• Synthetic
• Biotech

Active Pharmaceutical Ingredient Market by Type

• Generic
• Branded

Active Pharmaceutical Ingredient Market by Application

• Cardiology
• Pulmonology
• Oncology
• Ophthalmology
• Neurology
• Orthopedic

Frequently Asked Questions

• What is the worth of the Active Pharmaceutical Ingredient market?

The global Active Pharmaceutical Ingredient market is projected to reach USD 270.01 billion by 2030 from USD 160.36 billion in 2020, at a CAGR of 6.9 % from 2023 to 2030.

• What is the share of the North America Active Pharmaceutical Ingredient industry?

North America dominates the Active Pharmaceutical Ingredient market, with a market share of over 39%. 

• Which are the top companies to hold the market share in the Active Pharmaceutical Ingredient market?

Pfizer Inc., Novartis International AG, Sanofi S.A., Merck & Co., Inc., Boehringer Ingelheim GmbH, Teva Pharmaceutical Industries Ltd., Eli Lilly and Company, GlaxoSmithKline, Merck & Co., Inc., AbbVie Inc., Dr. Reddy's Laboratories Ltd., Sun Pharmaceutical Industries Ltd., Amgen Inc.

• What is the CAGR of Active Pharmaceutical Ingredient market?

The global Active Pharmaceutical Ingredient market registered a CAGR of 6.9 % from 2023 to 2030.

• What are the key factors driving the market?

Growing demand for biopharmaceuticals, strong surge in the demand for cost effective drugs such as generic drugs, and technological advancements in API production are some of the key factors driving the market.