Industry Outlook

The Active Pharmaceutical Ingredients Market accounted for USD 252.4 Billion in 2024 and is expected to reach USD 515.1 Billion by 2035, growing at a CAGR of around 6.7% between 2025 and 2035. Active pharmaceutical ingredients (APIs) are the primary components in medications responsible for their therapeutic effects. They are the biologically active substances that treat medical conditions. APIs can be synthetic or derived from natural sources and are formulated into various dosage forms such as tablets, capsules, or injections. Its pivotal role lies in ensuring the quality and safety of pharmaceuticals in the market by providing an exhaustive analysis of the API, a crucial component in the production of pharmaceutical products that are both safe and effective. The API market includes products and services such as synthetic and biological APIs, custom synthesis, contract manufacturing, and API development services for pharmaceuticals across various therapeutic areas. 

Report Scope:

Market Dynamics

Robust Demand for Pharmaceutical Drugs to Stimulate Market Growth

The rising global incidence of cancer is notably driving market growth. Cancer is one of the most common chronic diseases and is becoming a major health issue as it is increasing the mortality rate globally. Major factors that lead to cancer include genetic mutations, environmental factors such as tobacco smoking and pollution, and changing dietary patterns. The rising prevalence of these factors has directly contributed to the increased global incidence of cancer. As a result, cancer has become the second leading cause of death worldwide. In 2020, there were 19.3 million new cancer cases and 10 million cancer-related deaths worldwide. Moreover, healthcare providers need data related to cancer incidences to decide the volume of equipment and medicines to be purchased for treatment and develop awareness and prevention programs. Therefore, the rising incidence and prevalence of cancer among the population are expected to increase the demand for cancer biologics. Thus, the rapidly rising incidence throughout the world is a major factor that will drive the growth of the market during the forecast period.

Price Fluctuations in Emerging Nations to Restrict Market Growth

The periodic and unanticipated changes in the pricing policies of drugs in the emerging regions, where most of the manufacturing companies are situated, are expected to hinder market growth during the forecasted period. The dependency of the developed regions for the production of active ingredients in China has led to unforeseen changes in the pricing policy of China. This is projected to hurt the overall growth of this market.  For example, in August 2018, the price of chlorpheniramine API shot up 57 times, as Hunan Er-Kang Medical Operation and Henan Jiushi Pharmaceutical were abusing their dominance as the only local supplier. However, due to the intervention of China’s State Administration of Market Regulation (SAMR), and a high fine imposed by the regulatory body, the prices were driven back to regular levels.

Increased Outsourcing of API Production to Accelerate Growth Prospects

As the pharmaceutical industry is witnessing growth every day, several countries have implemented rigid regulatory guidelines for the production of pharmaceutical ingredients. These guidelines have been enforced upon the companies to regulate their production quality, thus enhancing the potential clinical effectiveness of the final product. This is further augmented by the increasing overhead costs of in-house API manufacturing, which has led pharmaceutical companies to reduce their focus on in-house manufacturing. Thus, resulting in many companies outsourcing their API manufacturing process. Also, outsourcing API manufacturing allows the companies to focus on drug discovery and development. It also enables pharmaceutical companies to have access to expertise on demand, specialized resources, as well as infrastructure. Asia Pacific is one of the regions that has witnessed massive growth in manufacturing, this is due to the companies that are situated in Western countries, which have cited a comparatively low-cost alternative for outsourcing production. Currently, various manufacturers have their robust footprints in China & India which is driving biopharmaceutical industries to look for partnerships with contract development and manufacturing organizations (CDMOs). For instance, in October 2023, SUANFARMA collaborated with Willow Biosciences Inc. for the development of a large volume API of anti-infective drugs. Thus, these organizations possess the technical know-how and capabilities for large-scale API manufacturing, which is anticipated to upsurge the active pharmaceutical ingredients market growth during the forecast period.

Industry Experts Opinion

Mentions that "Asia-Pacific's dominance in API production, particularly in India and China, is driven by cost-effective manufacturing and a skilled workforce."

• Dr. Robert Kim

 Notes that "the ongoing supply chain disruptions and focus on drug security are prompting many countries to strengthen domestic API manufacturing capabilities.”

• Dr. Sophie Martinez

Segment Analysis

Based on by Type: Based on type, the market is segmented into generic API and branded API. The branded API segment dominated the active pharmaceutical ingredients market share in 2023. Due to substantial R&D programs focusing on the development of various cost-effective and innovative products, various players are driven to launch innovative drugs in the market. The growth in the therapeutic application of novel generation of ingredients, which includes high-potency ingredients and peptides is anticipated to play a crucial role in the acceleration of the production of branded API. The rapid growth in the biotech and pharmaceutical firms across the globe is another major force that is set to boost the demand for branded APIs during the forecast period. However, as various key drugs are going off-patent and due to the consolidation in the pharmaceutical Industry, the demand for branded APIs has gradually decreased over the years. As a consequence of this, the generic APIs segment is likely to exhibit a significant growth rate during the forecast period owing to the patent expiry of branded drugs.

Based on By Synthesis: In terms of type of synthesis, the market is segmented into synthetic and biological. The market is dominated by the synthetic API segment, this is due to the low production cost of chemically synthesized ingredients and the comparatively low cost of the raw materials used for the production of synthetic ingredients. Easier protocols for the development of these molecules also lead to the growth of this segment. The biological segment is anticipated to register a comparatively higher growth rate during the forecast period, owing to the increase in demand for biopharmaceuticals and the growing number of innovations in biologics to address the high unmet medical needs existing for various disease conditions. Furthermore, the biological API segment is expected to be a highly profitable segment which in turn attracts the major pharmaceutical and biopharmaceutical companies. The increase in the number of FDA approvals for biological drugs including vaccines, blood components, and recombinant proteins is likely to boost the biological segment growth at a significant rate during the forecast period. For instance, in July 2020, Richcore LifeSciences, an Indian biotechnology company announced the expansion of a new manufacturing facility for the production of recombinant protein. The organization will house a 180,000-liter fermentation capability to produce recombinant protein for multiple purposes like biopharmaceutical, cell culture, and food industry. 

Regional Analysis

North America's API led the global API market owing to the rising prevalence of cardiovascular, genetic, and other chronic diseases aided by growing research in the field of drug development. The presence of key players such as AbbVie Inc.; Curia; Pfizer Inc., Viatris Inc.; and Fresenius Kabi AG is positively influencing growth.

Asia Pacific API market is registering the fastest growth over the forecasted years. The market is experiencing sharp growth as the majority of API production occurs in countries present in the region with high API export rates. China is the largest producer of APIs, manufacturing over 1,600 varieties of chemical APIs. Moreover, several key global players are establishing their operations in the region. Rising investment and initiatives to support and expand manufacturing facilities are further driving the growth of the overall API market. For instance, in November 2022, Aurobindo Pharma is expected to complete the Penicillin G plant approved under the PLI scheme by 2024, with an investment of USD 2,000 million to ensure and promote domestic manufacturing of API by increasing the production capacity to 15,000 tons annually in India. Moreover, in June 2022, Piramal Pharma Solutions invested USD 30 million to expand its capabilities in Telangana, India.  

Competitive Landscape

The competitive landscape demonstrates a fragmented active pharmaceutical ingredients market with the presence of various types of manufacturers.  AbbVie Inc., Teva Pharmaceutical Industries Ltd., and Mylan N.V. are the top API manufacturing companies with a diversified product portfolio, combined with the presence of state-of-the-art technology for the manufacturing of active ingredients. Other key players include Cipla Inc., Biocon, Amgen Inc., Dr. Reddy’s Laboratories Ltd, Sun Pharmaceutical Industries Ltd., and others.

Sanofi S.A., a global pharmaceutical giant headquartered in France, plays a significant role in the Active Pharmaceutical Ingredients (API) market. The company is involved in the development, production, and commercialization of a wide range of APIs, supporting its extensive portfolio of branded and generic drugs. Sanofi's API manufacturing is integrated into its global supply chain, ensuring the consistent quality and availability of key ingredients for its medications, including those for cardiovascular, diabetes, oncology, and vaccines. The company has invested in expanding its API production capabilities, particularly in emerging markets, to enhance cost efficiency and meet growing global demand. Additionally, Sanofi is focused on sustainability in its API production, aligning with global trends towards greener manufacturing processes. This positions Sanofi as a key player in the global API market, leveraging its extensive expertise and resources to maintain a competitive edge.

Roche, a global leader in pharmaceuticals and diagnostics, plays a significant role in the Active Pharmaceutical Ingredients (API) Market by leveraging its extensive expertise and capabilities in drug development and manufacturing. Roche's API segment focuses on producing high-quality, complex APIs for its drug portfolio and for external customers. The company is known for its innovation in biologics and high-potency APIs, which are critical for advanced therapies and oncology drugs. Roche’s commitment to maintaining stringent quality standards and regulatory compliance helps ensure the reliability of its API offerings. Additionally, Roche’s global network of manufacturing facilities supports its ability to meet diverse market needs. The company also invests in expanding its API production capacity and capabilities to cater to the growing demand for specialized and high-value APIs. Roche's strategic initiatives and advancements in API technology underscore its influential position in the global API market.

Active Pharmaceutical Ingredients Market, Company Shares Analysis, 2024

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Recent Developments:

• In October 2023, Lonza announced the launch of a new filling line for commercial supply of antibody-drug conjugates for its customers.
• In June 2023, Vertex Pharmaceuticals Incorporated collaborated with Lonza to support the manufacture of Vertex’s portfolio of investigational stem cell-derived, fully differentiated insulin-producing islet cell therapies for people with type 1 diabetes.

Report Coverage:

By Therapeutic Application

• Oncology
• Anti-diabetics
• Pulmonology
• Immuno-suppressants
• Neurology
• Cardiology
• Ophthalmology
• Orthopaedic
• Others

 By Synthesis Type

• Synthetic
• Biotech

By Manufacturer

• Merchant API
• Captive API

By Drug Type

• Branded
• Generic

By Region

North America

• U.S.
• Canada
• Mexico

Europe

• U.K.
• France
• Germany
• Italy
• Spain
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• Australia
• South Korea
• Singapore
• Rest of Asia Pacific

Latin America

• Brazil
• Argentina
• Mexico
• Rest of Latin America

Middle East & Africa

• GCC Countries
• South Africa
• Rest of the Middle East & Africa

List of Companies:

• Aarti Drugs
• Aurobindo Pharma
• Biocon Ltd
• Cipla, Inc
• Divi's Laboratories Limited
• Dr. Reddy’s Laboratories Ltd
• EUROAPI
• Hikal Ltd
• Merck & Co., Inc.
• Neuland Laboratories Ltd
• Pfizer, Inc
• Qilu Pharmaceutical Co., Ltd
• Solara Active Pharma
• Sun Pharmaceutical Industries Ltd
• Teva Pharmaceutical Industries Ltd
• Novartis International AG
• Roche Holding AG
• Bristol-Myers Squibb
• Boehringer Ingelheim GmbH
• AbbVie Inc.

Frequently Asked Questions (FAQs)