Active Pharmaceutical Ingredient Market

The size of global active pharmaceutical ingredient market in terms of revenue was estimated to be worth $163.5 billion in 2024 and is poised to reach $238.3 billion by 2029, growing at a CAGR of 7.8% from 2024 to 2029. The new research study consists of an industry trend analysis of the market. The new research study consists of industry trends, pricing analysis, patent analysis, conference and webinar materials, key stakeholders, and buying behaviour in the market.

The growth of this market is majorly driven by the growing adoption of generic drugs and growing expenditure. On the other hand, low profit margins and high manufacturing costs are the major factor restraining market growth to a certain extent.

Attractive Opportunities in Active Pharmaceutical Ingredients Market

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Global Active Pharmaceutical Ingredients (API) Market Dynamics

DRIVER: Production capacity expansion in pharmaceutical and biopharmaceutical companies

An increase in production capacity expansion of pharmaceuticals and biopharmaceuticals globally has augmented the demand for active pharmaceutical ingredients. A few recent examples of such capacity expansions are;

In November 2023, Novo Nordisk announced plans to expand its existing manufacturing capacity by building a new API facility in Kalundborg, Denmark. An investment of more than USD 6 billion was made in the project to enhance capacity throughout the entire global value chain, from API production to packaging. Most of the investment has helped expand API capacity.

In October 2023, Cambrex completed its USD 38 million capacity expansion at its small molecule API manufacturing facility in High Point, North Carolina. This expansion has doubled the facility's manufacturing capacity, with new state-of-the-art analytical and chemical development laboratories, two new clinical manufacturing suites, and a small-scale commercial manufacturing operation with three work centers and 2,000-liter reactors.

RESTRAINT: Low profit margins and high manufacturing costs

API manufacturing is a very complex and technically challenging process that involves the synthesis of chemical or biochemical compounds. The majority of a drug's overall price is made up of APIs.  For instance, APIs typically account for 40–50% of the cost of products sold for generic oral solids. Commodity API production is frequently a high-volume and low-margin industry where economies of scale are crucial. The average profit margin for API commodities is less than 10%.

Making the active ingredients in medicines can be really expensive. Companies have to spend a lot of money to upgrade their factories and meet quality standards. This involves renovating their production sites, learning about qualification rules, and gathering data to show that their products are safe and effective, which regulators require. Small companies face even higher costs to get approval from regulators because they don't produce as much. Also, making these ingredients involves using pricey and sometimes hard-to-find materials, which drives up costs even more.

OPPORTUNITY: Increased use of highly potent active pharmaceutical ingredients

Using highly potent active pharmaceutical ingredients (HPAPIs) marks a big shift in how drug companies create new treatments with small molecules. This change has led to a lineup of better medicines that need smaller doses. The advantages of HPAPIs, like being more effective, needing lower doses because they target specific actions, and being better at binding to certain receptors, are the main reasons why both API makers and customers are increasingly interested in them. Small molecules have traditionally dominated the active pharmaceutical ingredients market. As the generic active pharmaceutical ingredients market continues to get highly competitive, API manufacturers have shifted toward newer avenues, such as HPAPIs, to differentiate themselves from the competition.

CHALLENGE: Rising penetration of counterfeit drugs

The increasing penetration of counterfeit drugs poses a significant challenge for the active pharmaceutical ingredients market and the overall pharmaceutical industry. Counterfeit drugs are fake medications that are deliberately mislabeled, misrepresented, or adulterated. Fake or counterfeit medicines are made with low-quality or harmful ingredients and might be in the wrong form or dose. The World Health Organization (WHO) estimates that about 10% of all medicines are fake. In countries with strong laws and strict control over medicine supplies, the rate of fake medicines is around 1% of all medicines. But in low- and middle-income countries, the rate of fake medicines can be as high as 50%.

More and more fake drugs are causing real API makers to lose money. The EU Intellectual Property Office says that the European pharmaceutical industry loses about 7% of its sales each year because of fake drugs, which adds up to about $30.70 billion (or €26.9 billion). Plus, about 7,100 jobs are lost every year in the region because of these fake or counterfeit medicines

Active Pharmaceutical Ingredients Industry Ecosystem

The active pharmaceutical ingredients market is a complex ecosystem involving various stakeholders, including the supply side, which includes companies providing active pharmaceutical ingredients. The demand side includes pharmaceutical & biotechnology companies, contract research organizations, contract manufacturing organizations and others.

Several key companies provide active pharmaceutical ingredients. For example, Pfizer Inc. (US) is the leading market player. The company has maintained its leadership through its strong distribution network across North America, Asia-Pacific, Latin America, Europe, the Middle East and Africa. It focuses on expanding its presence in the market by strategically investing in R&D to launch innovative and advanced APIs in the market.  Other product providers include Teva Pharmaceutical Industries Ltd. (Israel), GSK PLC (UK), Sanofi (France), Viatris Inc. (US),  Divi's Laboratories Limited (India), Sandoz Group AG (Switzerland), and others.

The monoclonal antibodies sub-segment under biotech API segment dominated active pharmaceutical ingredient industry by product.

Based on product, biotech APIs can be categorized as monoclonal antibodies, hormones and growth factors, fusion proteins, cytokines, therapeutic enzymes, blood factors, and recombinant vaccines. The biotech APIs market is currently dominated by monoclonal antibodies, which is also the fastest-growing segment in this market. Factors such as the increasing incidence of cancer, increasing investments in R&D, technological advances in genetic sequencing and target gene selection, and reduced side effects as compared to chemotherapy are responsible for the large share of this segment. Monoclonal antibodies are proteins that are manufactured in laboratories in large quantities and are used to stimulate the immune system. These proteins act as antibodies and are highly selective and specific in their action and work by attaching to specific antigens and, hence, find applications in targeted therapies for oncology. mABs work by recognizing and binding specific proteins on cancer cells and inhibiting cancer growth and stopping metastasis.

The mammalian expression systems sub-segment under biotech APIs segment dominated active pharmaceutical ingredient industry by expression system.

Based on the expression system, biotech APIs can be categorized into mammalian expression systems, microbial expression systems, yeast expression systems, insect expression systems, and other expression systems. The biotech APIs market, expression system, is dominated by mammalian expression systems, owing to their ability to achieve the highest level of post-translational modifications and efficient protein folding, which makes them suitable for human use. Mammalian expression systems carry out post-translational modification and human protein-like molecular structure assembly, owing to which they are widely used for recombinant protein production. CHO, HEK, hybridomas, various mouse myeloma, and human cell lines are widely used as mammalian expression systems. According to the NCBI, CHO cell lines are the most used mammalian expression systems.

Asia Pacific is estimated to register the of the active pharmaceutical ingredient industry highest CAGR during the forecast period.

The Asia Pacific region is a hotspot for the active pharmaceutical ingredient market,

• Booming R&D: There's a surge in pharmaceutical research and development spending, creating a bigger need for APIs.
• Outsourcing on the Rise: Pharmaceutical companies are increasingly looking to outsource services, making Asia Pacific a prime location.
• Thriving Life Sciences Research: The life sciences research sector is flourishing, further fueling demand for APIs.
• Government Support: Growing government initiatives for healthcare research are adding another layer of support to the API market.

One key factor driving this growth is the increasing investment in healthcare infrastructure and R&D. Both governments and private companies are pouring money into research programs to improve healthcare facilities and make scientific breakthroughs. This includes advancements in API manufacturing technologies, which ultimately leads to more widespread use of APIs in various applications and research areas

The Asia-Pacific Economic Cooperation (APEC) recognized the potential of the life sciences industry in the region. To facilitate smoother market growth, APEC's Life Sciences Innovation Forum (LSIF) established a strategic plan called "Vision 2020." This plan aimed to achieve regional regulatory convergence for medical product approvals by 2020. Building on this foundation, the forum now has a more ambitious vision: to significantly accelerate this convergence by 2030. A streamlined approval process across APEC economies would benefit everyone. It would prioritize public safety by ensuring products meet strict standards. Life-saving medications would reach patients faster. Public healthcare systems would save resources through efficiencies. Investors would be more attracted to the region's stable regulatory environment. Additionally, it could help reduce corruption and elevate the overall global standing of APEC economies. Ultimately, these favorable regulatory guidelines are expected to be a major driver for the growth of the active pharmaceutical ingredients market in the Asia-Pacific region

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Key players in the active pharmaceutical ingredient market include Pfizer Inc. (US), Teva Pharmaceutical Industries Ltd. (Israel), GSK PLC (UK), Sanofi (France), Viatris Inc. (US),  Divi's Laboratories Limited (India), Sandoz Group AG (Switzerland), Boehringer Ingelheim International GmBH (US), SK Inc. (South Korea), Eli Lilly and Company (US), Merck KGaA (US), AbbVie Inc. (US), F. Hoffmann-La Roche Ltd. (Switzerland), AstraZeneca (UK), Dr. Reddy’s Laboratories Ltd. (India), Sun Pharmaceutical Industries Ltd. (India), Cipla (India), Aurobindo Pharma (India), Evonik Industries AG (Germany), Hikma Pharmaceuticals PLC (UK), BASF SE (Germany), Alembic Pharmaceuticals Limited (India), Aburaihan Pharmaceutical Company (Iran), Curia Global, Inc. (US), Cambrex Corporation (US), API Pharma Tech (US), Sreepathi Pharmaceuticals Limited (India), Shilpa Medicare Limited (India), Nanjing Jianyou Biochemical Pharmaceutical Co., Ltd. (China), Hovione (Portugal), ChemCon GmbH (Germany), and Pharco (Egypt)

Scope of the Active Pharmaceutical Ingredient Industry:

This report categorizes the active pharmaceutical ingredient market to forecast revenue and analyze trends in each of the following submarkets:

By Type

• Innovative APIs
• Generic APIs

By Synthesis

• Synthetic APIs
  • Innovative Synthetic APIs
  • Generic Synthetic APIs
• Biotech APIs
  • By Type
    • Innovative Biotech APIs
    • Generic Biotech APIs
  • By Product
    • Monoclonal Antibodies
    • Hormones and Growth Factors
    • Fusion proteins
    • Cytokines
    • Therapeutic enzymes
    • Blood factors and Anti-coagulants
    • Recombinant vaccines
  • By Expression Systems
    • Mammalian expression systems
    • Microbial expression systems
    • Yeast expression systems
    • Insect expression systems
    • Other expression system

By Type of Drug

• Prescription
• Over the Counter

By Potency

• Traditional APIs
• High Potency APIs

By Therapeutic Applications

• Communicable Diseases
• Oncology
• Diabetes
• Cardiovascular Diseases
• Respiratory Diseases
• Pain Management
• Others Therapeutic Applications

By End User

• Pharmaceutical & Biotechnology Industry
• Contract Research Organization
• Contract manufacturing Organization
• Others

By Region

• North America
  • US
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Hungary
  • Rest of Europe
• Asia Pacific (APAC)
  • Japan
  • China
  • India
  • South Korea
  • Australia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East
  • Israel
  • GCC
    • United Arab Emirates (UAE)
    • Saudi Arabia (KSA)
    • Rest of GCC
  • Rest of Middle East
• Africa

Recent Developments of Active Pharmaceutical Ingredients Industry:

• In January  2024, Dr. Reddy’s plans to invest Rs 700 crore (USD 84.7 Mn) into capacity expansion of biosimilars and Active Pharmaceutical Ingredients.
• In October 2023, Eli Lilly and Company made a contract with the Swiss contract manufacturer, CordenPharma, to produce tirzepatide, the API of the company's diabetes medication, Mounjaro.

Frequently Asked Questions (FAQ):

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