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The active pharmaceutical ingredients (API) market is a vital component of the pharmaceutical industry. APIs are the biologically active constituent of a drug that provides pharmacological activity or direct effect. APIs play an important role in drug development and manufacturing of pharmaceutical formulations. Development and manufacturing of APIs requires complex scientific and technological processes across the pharmaceutical value chain. APIs are used to produce both branded as well as generic drugs through different dosage forms like tablets, capsules, liquids, creams, gels, and injectables.
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.
The APIs market has witnessed significant growth owing to the growing demand for generics drugs across the globe. Generic drugs provide comparable alternative to branded drugs and help increase accessibility to medical therapies at affordable prices. As patents of many blockbuster drugs expire, generics manufacturers can produce bioequivalent drugs at lower prices through technologies like reverse engineering. This has accelerated generic drugs approvals and helped address the issues related to rising healthcare costs in many countries.
Key Takeaways
Key players operating in the Active Pharmaceutical Ingredients market are Teva Pharmaceutical Industries Ltd., Pfizer, Inc., Dr. 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.
The growing demand for generic drugs across major markets is a key driver for the API market. As the patents of many blockbuster drugs expire, generic drug manufacturers are launching bioequivalent drugs at lower prices compared to the branded formulations. This has increased the generic drug approvals and their market share globally. According to estimates, generics now account for over 80% of global drug production volume.
Globally, Europe and the United States continue to be the major markets for active pharmaceutical ingredients. However, Asia Pacific region is emerging as one of the fastest growing markets, led by China and India. Many API manufacturers are expanding their production capacities across Asia to reduce costs and cater to the growing demand from domestic generic drug companies in these countries. India and China together account for nearly 30% of global API exports.
Market Key Trends
One of the key trends in the active pharmaceutical ingredients market has been the shift towards generic drugs production due to rising healthcare costs globally. As the revenue contribution from smaller generic drugs companies continues to rise, APIs manufacturers are aligning their capacity investments to meet the demand. Continuing growth of biopharmaceuticals is another major trend influencing APIs demand. The lucrative biologics market requires specialized manufacturing capabilities and standards, representing new opportunities for API players with R&D expertise. Sustainability and green chemistry practices are also gaining increased focus to improve efficiency and environmental footprint in API production.
Porter’s Analysis
Threat of new entrants: The active pharmaceutical ingredients industry requires high R&D investment and compliance with strict regulatory norms which make entry difficult for new players.
Bargaining power of buyers: Large pharmaceutical companies have significant bargaining power over API manufacturers due to their bulk purchasing ability.
Bargaining power of suppliers: Due to requirement of specialized formulation techniques and compliance standards, the bargaining power of suppliers of raw materials and intermediates is moderate.
Threat of new substitutes: Threat from new substitute products is low as new drug discovery and approval process is long and capital intensive.
Competitive rivalry: The active pharmaceutical ingredients market is highly fragmented and competitive with presence of global as well as local manufacturers.
Geographical Regions
North America accounts for the largest share of the global active pharmaceutical ingredients market, primarily due to presence of major pharmaceutical players and stringent regulatory guidelines.
Asia Pacific region is expected to witness the fastest growth during the forecast period due to rising generic drug manufacturing, significant investments by market players and lower production costs. Countries like India, China and South Korea are emerging as major manufacturing hubs.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
