ACTIVE PHARMACEUTICAL INGREDIENTS MARKET ANALYSIS

The global active pharmaceutical ingredients market is estimated to be valued at US$ 235 Billion in 2023 and is expected to exhibit a CAGR of 6.8% during the forecast period (2023-2030).

Analysts’ Views on Global Active Pharmaceutical Ingredients Market: Active pharmaceutical ingredients (APIs) are the active substances in pharmaceutical products that deliver the intended therapeutic effects. Without APIs, medications would be ineffective. As a result, APIs are a fundamental component of the pharmaceutical industry, driving their constant demand. The market demand for cost-effective healthcare solutions has led to the growth of generic drugs. Generic drugs use the same APIs as their brand-name counterparts, making APIs crucial for providing affordable alternatives to expensive medications. For instance, in 2021, the U.S. FDA funded approximately US$20 million in generic drug science and research programs. Moreover, it also approved more than 75 original abbreviated new drug applications (ANDAs), some in record time, and since the beginning of the pandemic, more than 1,200 supplements.

Figure 1. Global Active Pharmaceutical Ingredients Market Share (%), By Product Type, 2023

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Global Active Pharmaceutical Ingredients Market – Drivers

The rise in prevalence of various infectious diseases and chronic disorders: The prevalence of chronic diseases like cardiovascular disorders, diabetes, and cancer has been increasing globally. APIs are used in the production of medications for these conditions, driving the demand for APIs. For instance, according to the Joint Research Center of the European Commission, the number of new cancer cases in Europe rose to 2.7 million in 2020, with 1.3 million deaths reported. Moreover, according to the World Health Organization (WHO) report published in September 2022, noncommunicable diseases (NCDs) or chronic diseases cause 41 million deaths each year, equivalent to 74% of all deaths globally. Additionally, the World Health Organization (WHO) reported that cardiovascular diseases caused more than 17.9 million deaths globally, accounting for 32% of all deaths. These statistics suggest that there may be potential opportunities for the pharmaceutical and biotechnology industries to produce dosage forms of new chemical entities in high-end therapy areas such as oncology and cardiovascular diseases.

 Increasing Demand for Generic Drugs: The global demand for cost-effective healthcare solutions has led to a growing demand for generic drugs, which are often produced using APIs. Generic drugs are cheaper alternatives to brand-name drugs, and this demand fuels the API market's growth. The expiration of product patents, which opens the market to generic medication and biosimilar manufacturers, is substantially responsible for the growth of the generic pharmaceutical business. For instance, in July 2020, Teva Pharmaceutical Industries Ltd., an Israeli multinational pharmaceutical company, entered into a joint venture with Takeda Pharmaceutical Company Limited, a Japanese multinational pharmaceutical company, aimed at manufacturing and commercializing specialty assets, complex generic drugs, and other pipeline opportunities. This joint venture was anticipated to drive the generic pharmaceuticals market.

Figure 2. Global Active Pharmaceutical Ingredients Market Share (%), By Region, 2023

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Global Active Pharmaceutical Ingredients Market - Regional Analysis

Among regions, North America is estimated to hold a dominant position in the global active pharmaceutical ingredients market over the forecast period. The North American market is witnessing a rise in the incidence of chronic diseases, and the government is taking initiatives to develop innovative drugs. The demand for biological API segment in North America is increasing due to the rapid adoption of biological drugs for treating various chronic disorders. For example, according to the Alzheimer’s Association, Alzheimer’s dementia affects approximately 6.2 million people aged 65 and older in the U.S., and it is estimated to increase to 12.7 million by 2050. The growth of this market in the North American region has been propelled by the increase in cases of such chronic disorders.

Global Active Pharmaceutical Ingredients Market – Impact of Coronavirus (COVID-19) Pandemic

In March 2020, the World Health Organization (WHO) announced the COVID-19 outbreak. Since the COVID-19 virus outbreak in December 2019, the disease has spread to over 100 countries across the globe, and the World Health Organization has declared it a public health emergency. According to the WHO, as of August 30, 2023, there had been 770,085,713 confirmed cases of COVID-19, including 6,956,173 deaths reported due to COVID-19.

The pandemic led to widespread disruptions in global supply chains due to lockdowns, travel restrictions, and factory closures. Many API manufacturers are located in countries that were heavily affected by the pandemic, such as India and China. This disrupted the production and transportation of APIs, leading to shortages of certain medications. For instance, Jubilant Pharmova, a global vertically integrated pharmaceutical company, reported a decrease of 7% in revenue in FY 2020 compared to FY 2019.  Similarly, market players like Cipla, an Indian multinational pharmaceutical company, have also recorded slower growth in the sales of their active pharmaceutical ingredient segment. However, the strong demand for lifesaving drugs such as respiratory pharmaceuticals, coupled with the reopening of API factories worldwide, is anticipated to rebound sales growth to reach pre-pandemic levels.

The pandemic led to an increased demand for certain medications, including those used to treat COVID-19 symptoms. This surge in demand put pressure on API manufacturers to ramp up production, potentially leading to challenges in meeting the increased requirements.

Global Active Pharmaceutical Ingredients Market Segmentation:

The global active pharmaceutical ingredients market report is segmented into product type, molecular type, formulation, application and region.

Based on product type, high potent APIs segment is expected to witness the fastest growth in the global active pharmaceutical ingredient (API) market over the forecast period. High potent API (HPAPI) medicines are a significant portion of the small molecule therapeutic research pipeline, and this group of products is expanding at a faster rate owing to its use in cancer therapies. For instance, in June, 2022 to accommodate the growing demand for cancer therapy components, Merck, a leading science and technology company, announced that its Life Science business sector has doubled its high- potent active pharmaceutical ingredients (HPAPI) production capacity with the expansion of its facility in Verona, near Madison, Wisconsin, USA.

Based on molecular type, small molecules segment is expected to witness the fastest growth over the forecast period in the global active pharmaceutical ingredient (API) market, owing to increasing demand for biologics and increasing approval of small molecule pharmaceuticals. For instance, in February 2020, Biocon, a biopharmaceutical  company that manufactures generic active pharmaceutical ingredients (APIs), announced that the U.S. Food and Drug Administration (FDA) completed post-approval and GMP inspection of its small molecules API manufacturing facility.

Based on formulation, injectables segment is estimated to witness the fastest growth in the global active pharmaceutical ingredient (API) market in 2021, owing to regulatory approvals of new injectables molecules. For instance, in January 2020, Teva Pharmaceuticals USA, Inc. received the S. FDA approval for an autoinjector device for AJOVY (fremanezumab-vfrm) injection. AJOVY is the only U.S. FDA-approved anti-calcitonin gene-related peptide (CGRP) that allows either a quarterly (675 mg) or monthly (225 mg) dosage.

Based on application, cardiovascular segment is expected to witness the fastest growth during the forecast period in the global active pharmaceutical ingredients (API) market, owing to the increasing prevalence of cardiovascular diseases. For instance, in December 2020, according to the American College of Cardiology, cardiovascular diseases (CVD) were the underlying cause of 9.6 million deaths among men and 8.9 million deaths among women. Over 6 million of these deaths occurred among people between the ages of 30 and 70. The highest number of CVD deaths occurred in China, followed by India, Russia, the U.S., and Indonesia.

Based on region, North America is expected to exhibit the highest CAGR in the active pharmaceutical ingredient (API) market growth over the forecast period due to lower costs of production, lower labor costs, and high-quality production centers. Moreover, the pharmaceutical and contract manufacturing industries are expanding in a number of nations of Asia Pacific, including China and India, and this is projected to boost the Asia Pacific market. Due to considerations like cheaper labor costs and the accessibility of production-ready raw materials, these nations have emerged as desirable locations to outsource the manufacturing of active ingredients.

Among all the segmentation, the application segment is expected to dominate the market over the forecast period, and this is attributed to the increasing application of therapeutics in cardiovascular treatments. Active Pharmaceutical Ingredients (APIs) play a crucial role in the treatment and management of cardiovascular diseases. APIs are the essential components in pharmaceutical formulations that directly contribute to the therapeutic effects of medications used to treat these conditions. For instance, on February 7, 2023, Astrazeneca, a British-Swedish multinational pharmaceutical and biotechnology company, announced that Forxiga (dapagliflozin) has been approved in the European Union to extend the indication for heart failure (HF) with reduced ejection fraction (HFrEF) to cover patients across the full spectrum of left ventricular ejection fraction (LVEF), including HF with mildly reduced and preserved ejection fraction (HFmrEF, HFpEF).

Global Active Pharmaceutical Ingredients Market - Cross Sectional Analysis:

Increasing demand for high potency active pharmaceutical ingredients (HPAPIs) is often used in the manufacturing of oncology drugs. The prevalence of cancer in North America has been steadily increasing, driving the demand for high-potency APIs used in chemotherapy and targeted therapies. North America has a large and growing pharmaceutical market with a demand for a wide range of therapeutic agents. As the market expands, so does the demand for HPAPIs. Moreover, market players are investing heavily in the development of HPAIs, which is driving the market further. For instance, in 2020, Piramal Pharma Solutions (PPS), a leading contract development and manufacturing organization (CDMO), announced the grand opening of a new wing at the Riverview site dedicated to the production of high potency active pharmaceutical ingredients (HPAPIs) with low occupational exposure levels (OELs). The total investment required to upgrade the site was approximately US$10 million.

Global Active Pharmaceutical Ingredients Market : Key Developments

On August 29, 2023, EUROAPI, a leading small molecules API manufacturer, and the shareholders of BianoGMP, a contract development and manufacturing organization, with recognized expertise in oligonucleotides, signed a share purchase and transfer agreement under which EUROAPI will acquire 100% of Biano shares.

On August 2, 2023, Cyclo Therapeutics, Inc., a clinical-stage biotechnology company, announced that it has closed the previously announced private placement with Rafael Holdings, Inc. for the purchase of 4,000,000 shares of common stock of Cyclo Therapeutics and warrants to purchase an additional 4,000,000 shares of common stock of Cyclo Therapeutics, for an aggregate purchase price of US$5,000,000.

In November 2022, EIB, the European Union’s (EU) long-term financing institution, and MedinCell, a pharmaceutical company, signed a new US$41 million loan agreement to support the development of innovative treatments. The new loan signed between the European Investment Bank (EIB), backed by the Investment Plan for Europe, and pharmaceutical company MedinCell is intended to support the development of the company’s portfolio of innovative. MedinCell’s portfolio is already composed of several long-active injectables products at preclinical and clinical stages.

In November 2022, GE Healthcare, the world’s leading supplier of contrast media, announced an US$80 million investment to increase manufacturing capacity by 30 percent at its Active Pharmaceutical Ingredients (API) site in Lindesnes, Norway.

Global Active Pharmaceutical Ingredients Market : Key Trends

Advanced Automation and Robotics: The manufacturing industry has undergone significant transformation with the integration of automation and robotics, and API manufacturing is no exception. The use of advanced automation technologies in manufacturing processes has brought about numerous benefits, including enhanced efficiency, improved quality control, and increased productivity. Robotic systems are capable of performing repetitive tasks with precision, reducing the risk of errors and contamination. Automated systems can handle complex processes such as formulation, weighing, and dispensing with greater accuracy and consistency, leading to better product quality and reduced batch variations. Additionally, automation enables real-time monitoring and data collection. For instance, in December 2022, WuXi STA, a subsidiary of WuXi AppTec and a leading global contract research, development and manufacturing organization (CRDMO), announced a partnership with Multiply Labs (based in San Francisco, CA, USA), a robotics company that has developed industry-leading automated manufacturing systems to produce individualized drugs. The implementation of this technology is driving the market.

Global Active Pharmaceutical Ingredients Market : Restraint

Stringent Rules and Regulation for Active Pharmaceutical Ingredients: APIs must adhere to strict safety and quality standards set by the manufacturing country. For instance, the standards, requirements, and procedures that APIs must meet before they can be used in marketing authorizations are primarily laid down in Directive 2001/83/EC, Regulation (EC) No 726/2004, and Directive 2011/62/EU. In India, the Drugs (Amendment) Rules, 2022, have been issued by the Ministry of Health and Family Welfare to further amend the Drugs Rules, 1945. The amendment makes QR codes mandatory on every active pharmaceutical ingredient. All these factors tend to limit the active pharmaceutical ingredient market.

Global Active Pharmaceutical Ingredients Market  - Key Players

• Major players operating in the global active pharmaceutical ingredients (API) market include Teva Pharmaceutical Industries Ltd., Pfizer, Inc., 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.

*Definition: Active pharmaceutical ingredients (APIs), also known as bulk pharmaceuticals, are the biologically active components in pharmaceutical drugs that produce the intended therapeutic effect. These ingredients are responsible for the pharmacological activity of a medication. APIs can be synthesized chemically or derived from natural sources such as plants, animals, or microorganisms, depending on the specific drug and its intended use.