Active Pharmaceutical Ingredients Market

Active Pharmaceutical Ingredients Market Outlook 2031 

The global active pharmaceutical ingredients market size was valued at USD 145.9 Billion in 2022 and is projected to reach USD 296.5 Billion by 2031, expanding at a CAGR of 8.2% during the forecast period 2023 - 2031. The growth of the market is attributed to the increasing prevalence of cardiovascular and cancer diseases and continuous development in active pharmaceutical ingredient (API) manufacturing.

Active pharmaceutical ingredient (API) refers to the active ingredient of a medicine (e.g., tablet, capsule, cream, injectable) which produces the intended effects. A drug is usually made up of several components. The primary ingredient is represented as the API, while excipient is the inactive ingredient of drug. For example, paracetamol is the API and the binding agent such as starch is the excipient in a paracetamol tablet.

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The quality of a drug's API determines its safety and efficacy. APIs that have been improperly manufactured or are unsafe to use can have serious consequences, including death. As a result, APIs must meet stringent safety and quality standards.

There are two main steps in the production of pharmaceuticals. Manufacturers convert raw materials into APIs in the first step. The second step includes mixing APIs and excipients into tablets, capsules, solutions, and other forms, and the final step includes packaging the drug for use by end users. APIs are either sold on the open market also known as the merchant market or used as inputs in final formulations by manufacturers.

Active Pharmaceutical Ingredients Market Trends, Drivers, Restraints, and Opportunities

• Increasing geriatric population worldwide is projected to boost the active pharmaceutical ingredients market growth during the forecast period.
• Increasing expenditure on healthcare by public and prevalence lifestyle diseases are the factors which is anticipated to propel the market growth in the forecast period.
• Government initiatives that encourage API development, as well as changes in geopolitical conditions is expected to drive the market growth in the coming years.
• Increased funding for research and development of pharmaceutical products for the treatment of covid-19 is projected to drive the market growth in the coming years.
• High cost of manufacturing of APIs and expensive chemical synthesis of APIs are expected to hamper the active pharmaceutical ingredients market growth.
• Lack of skilled work force and less availability of drugs in developing countries present as key challenges that can restrict the market growth during the forecast period.
• Increasing prevalence of various diseases, the growing number of off-patent biologic medicines, excellent results in current biosimilar clinical studies, and the growing need for biosimilars in diverse therapeutic applications are estimated to create significant opportunities for the key players.

Scope of Active Pharmaceutical Ingredients Market Report

The report on the global active pharmaceutical ingredients market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Active Pharmaceutical Ingredients Market Segment Insights

Synthetic segment is expected to account for a key share of the market

Based on type of synthesis, the active pharmaceutical ingredients market is bifurcated into biotech and synthetic. The biotech segment is further sub segmented into monoclonal antibodies, recombinant proteins, and vaccines. The synthetic segment is expected to account for a key share of the market during the forecast period owing to easing availability of raw material and easier synthesis techniques for these molecules.

On the other hand, the biotech segment is anticipated to expand at a rapid pace during the forecast period due to increasing demand for biopharmaceuticals and higher efficiency of these molecules. Furthermore, large investments in the biotechnology and biopharmaceutical industries might contribute to the biotech segment's growth. This provides the opportunity for development of new molecules that assist in the treatment of diseases like cancer.

Biotech-related API's high revenue makes the market extremely attractive, for key companies in the market. Recombinant proteins are widely utilized in gene sequencing, particularly in the creation of antibody probes within cells. As a result, recombinant proteins have a wide range of uses in targeted therapeutics. These proteins are important in the development of new treatments like cell therapy.

Captive API segment is expected to hold a key share of the market

Based on type of manufacturer, the active pharmaceutical ingredients market share is bifurcated into Captive APIs and Merchant APIs. The captive API segment is expected to hold a key share of the market during the forecast period owing to increased investments by key players for development of advanced manufacturing facility and ease of getting the raw material.

In addition, recent developments and activities by key companies indicate that they are increasingly focusing on in-house production rather than outsourcing.

In November 2019, Novartis announced the acquisition of CellforCure, a CDMO company in France, for the purpose of generating molecules in-house, which had previously been contracted to CellforCure. The segment's growth is expected to be driven by these initiatives taken by key players.

The cheaper manufacturing costs in countries like India and China make them a popular alternative for companies wishing to outsource their API development. Product outsourcing to developing nations is a cost-effective strategy that helps these companies to increase earnings, resulting in faster market growth.

Innovative APIs segment is expected to account for a key share of the market

Based on type, the active pharmaceutical ingredients market share is bifurcated into generic APIs and innovative APIs.

The innovative APIs segment is expected to account for a key share of the market during the forecast period owing to increased emphasis in R&D for new drug development and favorable government regulations. Many novel products are presently in the pipeline as a result of extensive research in this field and are projected to be introduced throughout the forecast period.

This market is projected to be driven by new entrants. A surge in demand for targeted treatments including high-potency API molecules, such as HPAPI, is expected to drive up demand for customized medications.

On the other hand, the generic APIs segment is anticipated to expand at a rapid pace during the forecast period owing to Patent expiry of branded molecules. Due to significant unmet clinical requirements and acceptability of OTC drugs, the generic drug industry is expected to rise rapidly in countries such as Brazil and India.

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Cardiovascular diseases segment is expected to constitute a key share of the market

Based on applications, the active pharmaceutical ingredients market share is segmented into cardiovascular diseases, oncology, CNS and neurology, orthopedic, endocrinology, pulmonology, gastroenterology, nephrology, ophthalmology, and others.

The cardiovascular diseases segment is expected to constitute a key share of the market during the forecast period owing to increasing prevalence of cardiovascular diseases. Initiatives by public and private organizations to spread the awareness is also anticipated to boost the market growth and thereby thus driving demand for APIs for cardiology drugs.

On the other hand, the oncology segment is anticipated to expand at a rapid pace during the forecast period due to increasing prevalence of cancer and changing lifestyles.

The frequency of numerous metabolic disorders is increasing as people embrace a more sedentary lifestyle. In most nations, hormonal imbalance is becoming more of a problem. Thyroid and sex hormone imbalances are examples of these conditions. Other disorders, like as diabetic retinopathy and macular degeneration, are on the rise, driving up demand for highly efficient and cost-effective treatments.

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North America is anticipated to dominate the market

On the basis of regions, the active pharmaceutical ingredients market is (classified/categorized) as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America is anticipated to dominate the market at an impressive CAGR during the forecast period. The regional market growth can be attributed to growing incidence of cancer and other lifestyle-related disorders.

On the other hand, Asia Pacific is expected to exhibit a rapid growth rate in the coming years owing to increased healthcare expenditure. The existence of economies like China and India, which the world relies on for low-cost API manufacturing, is a benefit for the region.

Europe is also expected to exhibit a rapid growth rate in the coming years owing to increased R&D investments and presence of key players in the region.

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Segments

The global active pharmaceutical ingredients market has been segmented on the basis of

Type of Synthesis

• Biotech
  • Monoclonal Antibodies
  • Recombinant Proteins
  • Vaccines
• Synthetic

Type of Manufacturer

• Captive APIs
• Merchant APIs

Type

• Generic APIs
• Innovative APIs

Application

• Cardiovascular Diseases
• Oncology
• CNS and Neurology
• Orthopedic
• Endocrinology
• Pulmonology
• Gastroenterology
• Nephrology
• Ophthalmology
• Others

Regions

• Asia Pacific
• North America
• Latin America
• Europe
• Middle East & Africa

Key Players

• Merck & Co., Inc.
• AbbVie, Inc.
• Bristol-Myers Squibb Company
• Boehringer Ingelheim International GmbH
• Teva Pharmaceutical Industries Ltd.
• Cipla, Inc.
• Albemarle Corporation
• Viatris Inc.
• Aurobindo Pharma
• Sun Pharmaceutical Industries Ltd.
• Dr. Reddy’s Laboratories Ltd.

Competitive Landscape

Key players competing in the active pharmaceutical ingredients market include/are Merck & Co., Inc.; AbbVie, Inc.; Bristol-Myers Squibb Company; Boehringer Ingelheim International GmbH; Teva Pharmaceutical Industries Ltd.; Cipla, Inc.; Albemarle Corporation; Viatris Inc.; Aurobindo Pharma; Sun Pharmaceutical Industries Ltd.; Dr. Reddy’s Laboratories Ltd.

The active pharmaceutical ingredient market is quite complicated. Patent expiration of popular pharmaceuticals, growing outsourcing operations owing to high manufacturing costs, and rigorous rules on API production are all projected to maintain high market competition during the forecast period. Due to non-compliance with regulations, a number of key players are facing legal actions.

For example, in August 2019, the United States Food and Drug Administration (FDA) issued 75 warning letters to API manufacturing facilities, half of which were to Indian and Chinese companies.