The global active pharmaceutical ingredient market size was USD 177.0 billion in 2021, and it is estimated to reach USD 322.7 billion by 2030, registering a CAGR of 7.8% from 2022 to 2030. The rising research and development activities for drug manufacturing, the increasing importance of generics, and the increasing uptake of biopharmaceuticals are all driving the global active pharmaceutical ingredients market forward. However, growth is expected to be hampered by unfavorable drug price control policies and high manufacturing costs in various countries.
The rising prevalence of chronic diseases is expected to increase drug demand, which will drive future growth in the active pharmaceutical ingredients market. In addition, new drug and biological product launches, acquisitions, collaborations, and regional expansions are some of the strategic initiatives to keep the market stable. This is likely to fuel future market growth. For instance, in 2020, Quartic.ai and Bright Path Labs collaborated to develop AI-based technology for the continuous manufacturing of critical APIs required for producing crucial small-molecule drugs.
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Global Active Pharmaceutical Ingredients Market (API) Definition
Active pharmaceutical ingredients is substance or combination of substances used in a finished pharmaceutical product, intended to provide pharmacological activity or to otherwise have direct effect in the mitigation, diagnosis, treatment, cure, or prevention of disease, or to have direct effect in restoring, correcting or modifying physiological functions in human beings.
Global Active Pharmaceutical Ingredients Market Covid-19 Impact
The contagious coronavirus had potential economic impacts and implications on most sectors, including the pharmaceutical industry. Globally, governments are responding to the threat of COVID-19 with all the essential measures, such as travel restrictions, social distancing, nationwide lockdown, and large-scale quarantines, which are anticipated to negatively impact businesses and consumers spending.
COVID-19 disrupts the pharmaceutical industry, causing drug shortages worldwide and exposing the need for a more resilient global supply chain. Thus, in India, strict regulations were imposed to tackle possible domestic shortages of medicines as the COVID-19 infection cases continued to rise in India. Due to the rising number of COVID-19 cases in India, the Indian Ministry of Commerce and Industry prohibited the export of 26 APIs and formulations using such APIs in March 2020.
Global Active Pharmaceutical Ingredients Market Research Report Dynamics
Drivers: Increasing Prevalence of Infectious, Genetic, Cardiovascular, and Other Chronic Disorders
Chronic diseases are the most prevalent health condition that involves significant expenditure globally. Chronic diseases include cancer, diabetes, hypertension, stroke, heart disease, respiratory diseases, arthritis, and obesity, long-term disability, leading to hospitalization, reduced quality of life, and even death.
According to the OECD, Health at a Glance, 2019 report, almost one-third of persons aged 15 years and over reported living with two or more chronic conditions, including cancer, heart attack and stroke, chronic respiratory problems, and diabetes, on average across 27 OECD countries globally. In Germany and Finland, the prevalence of chronic diseases rises to almost one in two. ?The growing cardiovascular disease cases are expected to further increase the demand for drugs, accelerating API production.
Restraints: Drug Price-Control Policies across Various Countries
A very little balance exists in protecting industry innovations while providing adequate accessibility and affordability for effective treatments. Many governments from various countries have taken initiatives to provide adequate access to treatments for diseases among the people. However, this has somehow restricted or limited the profit margins of the pharmaceutical companies.
The drug price is controlled by the Pharmaceutical Benefits Scheme (PBS) in Australia. The PBS is a universally accessible national formulary that covers approximately 90% of prescriptions available in Australia. The Australian population has universal pharmaceutical insurance through PBS, which means that they are accessible to drugs at comparatively lower prices. The price of Australia’s drugs is lower than almost all the other OECD countries. Manufacturers have to list the drugs on PBS, which signifies that it is made cost-effective. This limits the profit margin of pharmaceutical companies.
Scope of the Global Active Pharmaceutical Ingredients Market
The study categorizes the active pharmaceutical ingredients market based on business mode, synthesis type, application, and type at the regional and global levels.
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By Business Mode Outlook (Sales, USD Billion, 2017–2030)
- Captive API
- Merchant API
By Synthesis Type Outlook (Sales, USD Billion, 2017–2030)
- Synthetic
- Biotech
By Type Outlook (Sales, USD Billion, 2017–2030)
- Generic
- Branded
By Application Outlook (Sales, USD Billion, 2017–2030)
- Cardiology
- Pulmonology
- Oncology
- Ophthalmology
- Neurology
- Orthopedic
- Other Applications
By Region Outlook (Sales, USD Billion, 2017–2030)
- North America (US, Canada, Mexico)
- South America (Brazil, Argentina, Colombia, Peru, Rest of Latin America)
- Europe (Germany, Italy, France, UK, Spain, Poland, Russia, Slovenia, Slovakia, Hungary, Czech Republic, Belgium, the Netherlands, Norway, Sweden, Denmark, Rest of Europe)
- Asia Pacific (China, Japan, India, South Korea, Indonesia, Malaysia, Thailand, Vietnam, Myanmar, Cambodia, the Philippines, Singapore, Australia & New Zealand, Rest of Asia Pacific)
- The Middle East & Africa (Saudi Arabia, UAE, South Africa, Northern Africa, Rest of MEA)
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The Captive API segment is accounted for the largest market share
Based on business mode, the market is segmented into Captive API and Merchant API. The captive API segment is accounted for the largest market in 2021, with a market share of 64.8%. The captive API is defined as APIs used by pharmaceutical companies for the in-house production of finished dosage forms. Production of APIs has traditionally been done by pharmaceutical companies themselves in their home countries. However, many corporations have opted to send manufacturing overseas to cut costs in recent years.
Also, due to the current COVID-19 situation, companies, such as Amneal Pharmaceuticals, which performs captive APIs for its finished pharmaceutical products, have been facing hydroxychloroquine active pharmaceutical ingredients shortage after Finland tightens production, as drug makers have promised millions of doses for clinical trials and hospitals. Still, these shortages may impact market growth.
Asia Pacific accounts for the highest CAGR during the forecast period
The market has been studied based on global regions, including North America, Asia–Pacific, Europe, South America, and the Middle East & Africa. In the active pharmaceutical ingredients market, Asia Pacific is the fastest-growing region with a CAGR of 8.1% during the forecast period. China holds the largest market share in the Asia Pacific, whereas India is the fastest-growing country.
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The Indian market for active pharmaceutical ingredients is growing rapidly, and Indian companies are competing globally for a significant position in this potential market. Advancements in active pharmaceutical ingredient (API) manufacturing, growth of the biopharmaceutical sector, and increasing geriatric population are the key drivers of the regional market. In addition, the government of India is taking initiatives to boost biopharmaceutical products in the market, which will be beneficial for the market growth in the region. For instance, the Department of Biotechnology (DBT) and Biotechnology Industry Research Assistance Council (BIRAC) is taking various initiatives to promote research and development activities in biotechnology-based drugs.
Key Market Players
The active pharmaceutical ingredients market is mildly concentrated in nature with few numbers of global players operating in the market such as Aurobindo Pharma, Pfizer Inc., Novartis AG, BASF SE, Boehringer Ingelheim GmbH, Dr. Reddy’s Laboratories Ltd, Teva Pharmaceutical Industries Ltd, Lupin Ltd., Viatris, and Sun Pharmaceutical Industries Ltd. Every company follows its own business strategy to attain the maximum market share.