The active pharmaceutical ingredients (API) market refers to the bulk manufacturing section of generic pharma industry that develops and manufactures APIs which are active components of any drug. APIs provide the specific biological or chemical properties necessary to prevent or treat a disease. APIs are the essential components in generic drugs and are widely used to manufacture medicines for cardiovascular, anti-infective, central nervous system, respiratory and musculoskeletal therapeutic areas. They offer effective treatment at economical prices compared to branded drugs. As healthcare costs continue to rise globally, the demand for affordable generic drugs is also increasing significantly. This, in turn, is expected to propel growth of the API market during the forecast period.

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: Key players operating in the active pharmaceutical ingredients (API) market include Teva Pharmaceutical Industries Ltd., Pfizer, Inc., Dr. Reddy's Laboratories Ltd., Novartis AG among others. These players are focusing on strengthening their API manufacturing capabilities and expanding their product portfolios through collaborations and acquisitions.

Growing demand: Rising prevalence of chronic diseases worldwide along with the growing geriatric population is fueling the demand for affordable generic drugs. This high demand is directly boosting growth of the API market.
Additionally, growing penetration of health insurance in developing nations is further driving the preference for low-cost generics and thereby API's.

Technological advancements: Continuous advancements in API manufacturing technologies such as continuous manufacturing, 3D printing etc. are helping players to enhance efficiency, quality, and sustainability of API production. adoption of Industry 4.0 technologies can optimize manufacturing processes further and lower production costs.

Market Trends

- Growing investment in insourcing of API manufacturing: In response to supply chain issues during COVID-19 pandemic, many pharmaceutical companies are increasing investments in insourcing APIs to mitigate risks of dependency on foreign suppliers. This trend is expected to continue in coming years.

- Sustainable manufacturing practices: With increasing focus on reducing environmental footprint of pharma industry, players are emphasizing on leveraging green chemistry principles and optimizing energy & water usage in API manufacturing facilities. Adoption of circular economy can bolster sustainability in long run.

Market Opportunities

- Opportunities inbiologics APIs: As biologic drugs witness wider acceptance, bio-similar APIs present lucrative growth prospects. Investment in bio-similar drug development can potentially capture higher market share.

- Opportunities in emerging markets: Emerging economies in Asia Pacific and Latin America with growing healthcare access present significant opportunities for API manufacturers. Setting up local manufacturing infrastructure can help target these high potential markets effectively.

Impact of COVID-19 on Active Pharmaceutical Ingredients Market

The COVID-19 pandemic has significantly impacted the growth of the active pharmaceutical ingredients market. During the initial phases of the pandemic, the market witnessed a steep decline as countries went into lockdown and manufacturing came to a halt. Supply chains were disrupted globally affecting the production and distribution of APIs. This led to shortages of key drugs and increased their prices.

However, as the pandemic intensified, the demand for APIs also grew rapidly. There was a surge in demand for APIs used in medications to treat COVID-19 patients such as remdesivir, hydroxychloroquine, and lopinavir/ritonavir. Companies ramped up production of such APIs to meet the growing needs. Investments in R&D of new drug formulations also increased during this time. Regulatory approvals were fast-tracked to aid the development of new medications.

In the post-COVID era, the demand for APIs is projected to remain high. While manufacturing and supply chains have stabilized, intermittent disruptions still remain a challenge. Companies are focusing on localized production and inventory stockpiling to mitigate risks. The pandemic has highlighted the need for diversified global supply sources. It has also accelerated the digital transformation of operations through technologies like AI and IoT. With increased funding into drug development, the API market is expected to grow steadily in the coming years.

Europe holds the largest share of the global active pharmaceutical ingredients market in terms of value. This is attributed to factors like the high per capita healthcare expenditure, availability of advanced healthcare facilities, and presence of leading pharmaceutical companies in the region. Furthermore, Europe is a major hub for generic drug manufacturing which drives the API demand.

The Asia Pacific region is poised to be the fastest-growing market for active pharmaceutical ingredients during the forecast period. This growth can be attributed to rising generic drug consumption and increased production outsourcing to Asia by major players due to low manufacturing costs. Countries like India and China have emerged as global API exporters, augmenting regional market growth. Additionally, improving regulatory norms and infrastructure are also supporting the expansion of the API industry in Asia Pacific.