The global active pharmaceutical ingredients market size (in U.S. dollars) was $169 billion in 2020 and is anticipated to grow at a CAGR of 6.1% from 2021 to 2030.
An active pharmaceutical ingredient is a substance or mixture of substances that provide pharmacological action and is intended to directly impact disease diagnosis, remedy, mitigation, therapy, or prevention by repairing, correcting, or altering human physiological functions.
The global active pharmaceutical ingredients (API) market has experienced significant growth in the last decade due to an increase in the incidence of chronic diseases.
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Increased Abbreviated New Drug Applications (ANDA) drive demand for active pharmaceutical ingredients (API). To market a generic drug, a company needs to file Abbreviated New Drug Application (ANDA). An ANDA approval implies that the generic drug is comparable to the original drug in terms of dosage form, strength, route of administration, quality, performance characteristics, and intended use.
However, companies cannot manufacture a drug unless the patent of the drug expires. Hence, as billion-dollar drugs lose patents, other drug manufacturers grab the opportunity to manufacture low-cost generics and file for ANDA to the U.S. FDA.
The pharmaceutical industry has suffered significantly due to the patent expiry of blockbuster drugs in the past few years. Demand for low-cost substitutes is high in low- and middle-income countries in the Asia Pacific, Africa, and Latin America. This increases the number of API manufacturers, as pharmaceutical drug manufacturers did not have enough in-house capacity to meet the demand.
Currently, most API manufacturers are concentrated in Asia, primarily India, China, and Taiwan. Teva Active Pharmaceutical Ingredients (TAPI), Aurobindo, and Sun Pharma are the leading API manufacturers in the region.
An increase in the incidence of chronic diseases drives the global active pharmaceutical ingredients (API) market. According to the International Diabetes Federation, in 2019, 463 million people worldwide were diagnosed with diabetes. Moreover, the number of new cancer cases per year is expected to increase to 23.6 million by 2030. Besides cancer, several other diseases have shown a rise in prevalence rates. The increase in the prevalence of cancer, cardiovascular diseases, and diabetes, surge in sedentary lifestyle; and geriatric population are the key drivers of the active pharmaceutical ingredients (API) market.
Lung cancer is the leading cause of cancer deaths in the Asia Pacific. China alone accounts for over 50% of all cancer cases in the region. Changes in lifestyle and socio-cultural factors are the leading causes of cervical cancer. India, Thailand, and China are major countries affected by breast cancer in the Asia Pacific.
Small molecule drugs account for a significant share of the current drug pipeline. Despite new biologic entities entering the market, small molecules are experiencing a surge in usage in the clinical pipeline. A maximum number of FDA approvals in the last decade has been for small molecule drugs, and the trend is likely to continue during the forecast period.
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In-House Manufacturing to Dominate Global Market
In terms of manufacture type, the global active pharmaceutical ingredients (API) market has been segmented into in-house manufacturing and contract manufacturing. The in-house manufacturing segment dominated the global active pharmaceutical ingredients (API) market in 2020, and the trend is projected to continue during the forecast period. International players, such as Merck KGaA, prefer the in-house production of APIs. This is a significant factor driving the segment. These players believe that in-house manufacturing provides control of the process from start to finish. It offers the flexibility to adapt as and when required. This is especially useful when a company wants to respond to the market quickly and make a consumer-led change to the product, as it does not have to go through another company or rely on anyone else. These factors are anticipated to boost the segment’s growth during the forecast period.
Costing a manufacturing operation can be substantial, so outsourcing manufacturing often makes sense. It frees a company from responsibility for hiring and managing the staff required to do the job correctly. This factor, coupled with others that are likely to drive demand for contract manufacturing, is expected to make contract manufacturing an increasingly popular method of production.
Branded or Innovative Prescription Drugs to be Highly Lucrative
Based on drug type, the global active pharmaceutical ingredients (API) market has been categorized into branded or innovative, generic, and OTC drugs. The branded or innovative prescription drugs segment accounted for a significant share of the global active pharmaceutical ingredients (API) market in 2020. According to TMR Research, medicine use has continued to rise, with people in the U.S. filling 5.8 billion prescriptions in 2018, an increase of 2.7% over the previous year. This was primarily driven by more patients receiving existing branded drugs and using newly launched drugs.
Synthetic to be Highly Attractive API
Regarding API type, the global active pharmaceutical ingredients (API) market has been classified into synthetic, biological, and plant extracts. The synthetic segment accounted for a significant share of the global active pharmaceutical ingredients (API) market in 2020. This can be attributed to the higher availability of raw materials and more accessible protocols for synthesizing these molecules.
Cardiovascular to be a Major Application of API
The global active pharmaceutical ingredients (API) market has been divided into anti-infective, cardiovascular, neurological, metabolic disorder, respiratory, oncology, and others. The cardiovascular segment accounted for a significant share of the global active pharmaceutical ingredients (API) market in 2020. Drug therapy is an effective treatment modality for cardiovascular disease. Hypertension and cardiovascular diseases (CVD) are common conditions, accounting for substantial medical disability and death worldwide. New classes of cardiovascular drugs would be practical for treating hypertension and CVD and decreasing their socio-economic consequences. Recent drug approval is a prominent factor driving the demand for APIs. These factors are expected to propel the segment during the forecast period.
High Use of API in Pharmaceutical & Biotechnology Industry
The global active pharmaceutical ingredients (API) market has been categorized into pharmaceutical & biotechnological industry, CROs, CMOs, and others. The pharmaceutical & biotechnological industry segment accounted for a significant share of the global active pharmaceutical ingredients (API) market in 2020. Many pharmaceutical & biotechnology companies and their preference for in-house manufacturing of finished dose products drive the segment. Additionally, pharma companies are opening their manufacturing plants in emerging markets instead of imports to sell products, which causes the element.
North America to Dominate API Market
The global active pharmaceutical ingredients (API) market has been segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. North America dominated the global active pharmaceutical ingredients (API) market in 2020, followed by the Asia Pacific. The rise in the prevalence of lifestyle diseases and the increase in healthcare expenditure is anticipated to boost the market in North America during the forecast period.
The active pharmaceutical ingredients (API) market in the Asia Pacific is anticipated to expand at a significant CAGR from 2021 to 2031. Favourable government initiatives, changing lifestyles leading to the development of diseases, a rise in investment in R&D, and technological developments in drug manufacturing processes boost the market in the region.
Competitive Landscape and Market Share Analysis
The active pharmaceutical ingredients market competitive landscape provides details by vendors, including company overview, total company revenue (financials), market potential, global presence, active pharmaceutical ingredients sales and revenue generated, market share, price, production sites and facilities, SWOT analysis, product launch. For 2017-2020, this study provides the active pharmaceutical ingredients sales, revenue and market share for each player covered in this report.
Crucial data regarding the significant contenders, product portfolio, market remuneration, and production patterns are documented in the report. The report presents the pricing models followed by each company, alongside the gross margins and market share held by a big company.
Market Segmentation
By Manufacturer Type
- In House Manufacturing
- Contract Manufacturing
By Drug Type
- Branded or Innovative Prescription Drugs
- Generic Prescription Drugs
- Over-the-counter (OTC) Drugs
By API Type
- Synthetic
- Biological
- Plant Extracts
By Application
- Anti-infective
- Cardiovascular
- Neurological
- Metabolic Disorder
- Respiratory
- Oncology
- Others
By End-User
- Pharmaceutical & Biotechnological Industry
- CROs
- CMOS
- Others
By Region
- North America
- Europe
- Asia Pacific
- Latin America
- Middle East & Africa
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