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The Active Pharmaceutical Ingredients (API) Market refers to the pure chemical substance or components that are pharmaceutically active in a drug. APIs are used in the formulation or manufacturing of pharmaceutical drugs to provide therapeutic effects. Major advantages of APIs include lower costs compared to branded drugs, availability of generic versions of patented drugs after expiry, and treatment of chronic diseases affecting large patient populations.
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 market include 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.
Growing demand: There is a growing demand for generic drugs due to the patent expiries of major drugs and increasing pressure to reduce healthcare costs. This is driving greater demand for APIs from generic drug manufacturers.
Global expansion: Leading API manufacturers are expanding their global footprint by investing in new facilities across emerging markets. This will help them serve their international customer base and tap the high growth opportunities in regions such as Asia Pacific, Middle East, and Latin America.
Market key trends
Outsourcing of APIs manufacturing is a major trend with several big pharmaceutical companies outsource the manufacturing of APIs to Captive and Contract Manufacturing Organizations (CMOs). This helps them stay focused on drug discovery and new product development. Another key trend is the shifting of API manufacturing to Asian countries such as India and China due to availability of raw materials, infrastructure and lower costs. Countries are also promoting local manufacturing of APIs to reduce reliance on imports.
Porter’s Analysis
Threat of new entrants: The active pharmaceutical ingredients market requires high capital investments and strict regulatory approvals which pose significant entry barriers for new players.
Bargaining power of buyers: Large pharmaceutical manufacturers and generic drug makers have significant bargaining power over API suppliers due to the consolidated nature of demand.
Bargaining power of suppliers: A few global players dominate the supply of many generic and specialty APIs, giving them higher bargaining power over drug makers.
Threat of new substitutes: Substitution threat is low as APIs have limited substitutes for their intended therapeutic use in medicines.
Competitive rivalry: The API market is characterized by competition on factors like price, quality, reliability of supply and regulatory compliance.
Geographical Regions
North America accounts for the largest share of the global active pharmaceutical ingredients market, mainly due to higher healthcare spending and increasing incidence of chronic diseases in the US. The region is also home to many leading innovator drug companies and global API suppliers.
Asia Pacific is projected to be the fastest growing regional market between 2024-2031. This can be attributed to rising generics production in India and China to meet the growing global demand. Additionally, increasing penetration of health insurance and expansion of healthcare infrastructure are driving the growth of the regional API industry.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
