Active Pharmaceutical Ingredient Market

Global Market Study on Active Pharmaceutical Ingredients: Growing Prevalence of Chronic Disorders Increasing Demand for Pharmaceuticals & APIs

  • March-2021
  • PMRREP11260
  • 220 Pages
  • Healthcare
  • PPT, PDF, WORD, EXCEL

About the Report

An active pharmaceutical ingredient (API) is a substance present in a finished drug product, which shows pharmacological activity. API shows direct effect on the cure, diagnosis, mitigation, or prevention of the target disease. APIs are responsible for restoring, modifying, or correcting physiological functions in the human body. Prevalence of chronic diseases is constantly on the rise, globally. Rising chronic diseases is creating a major health burden on most economies. These include diabetes, cardiovascular diseases, cancer, obesity, osteoporosis, and pulmonary diseases. Cardiovascular diseases make up about half of the total deaths caused by chronic diseases. Rising prevalence of these diseases is surging demand for pharmaceutical products, thereby increasing the need for APIs across regions.

In its revised study, market research and consulting firm Persistence Market Research offers insights about key factors driving demand for active pharmaceutical ingredients (API). The study expands on the previous competitive landscape section, and readers will get to know the key strategies of established players as well as new entrants. This 2021-2031 edition brings readers up-to-date with key market developments, providing analysis on how manufacturers and other stakeholders are reacting to change. Key industry metrics have been captured, and their impact on API sales has been analyzed. The report tracks global sales in 20+ high-growth markets, along with analyzing the impact COVID-19 has had on the pharmaceutical market in general, and APIs in particular.

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Companies

  • Pfizer Inc.
  • Boehringer Ingelheim International GmbH
  • Bristol-Myers Squibb Company
  • Cipla Inc.
  • Eli Lilly and Company
  • F. Hoffmann-La Roche Ltd
  • GlaxoSmithKline plc
  • Hepalink Group
  • Lonza
  • Merck & Co. Inc.
  • Sandoz International GmbH
  • Aurobindo Pharma Limited
  • Fresenius Kabi LLC

Historical Vs Future Industry Outlook

Over the past few years, the pharmaceutical industry has witnessed rapid growth in the outsourcing pharmaceutical services. This growth is attributed to the demand for small molecules, increasing demand of complex APIs, and lookout for cost-effective processes. Big pharma companies are struggling to make their R&D effortless, and are focused on increasing the speed of their processes to market their blockbuster drugs. These companies are also trying to reduce their drug development and manufacturing costs. As a result, many contract manufacturing organizations or CDMOs are under development. CDMOs are expected to have a great future over the coming years, owing the cost effectiveness of outsourcing manufacturing capabilities. The need for niche competencies for manufacturing of complex APIs has made pharma companies outsource the activities rather than manufacturing them in-house.

According to Persistence Market Research’s analysis, the active pharmaceutical ingredients market expanded at 3.4% CAGR from 2016 to 2020, and over the next ten years, this growth is pegged ever higher at more than 4% CAGR.

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Increasing Research on Small Molecule APIs

Currently, small molecule drugs hold a significant share of pharmaceutical revenues for current drug pipelines. Despite new biologic entities entering the market, small molecules are experiencing resurgent occurrence in the clinical pipeline. Maximum number of FDA approvals over the decade have been for small molecule drugs, and this trend will continue over the coming years.

As many disease targets are not accessible for large molecules, success of small molecules is eminent. Small molecule manufacturing will continue to increase over the next decade, owing to increasing need for efficient and cost-effective drugs. Small molecules will serve the goal of providing efficient drugs that can cure a large pool of patients, with economic national health budgets, especially in lower-income countries.

The COVID19 outbreak has shaken several industries with complete lockdowns imposed after its outbreak. Economies and industries were shattered with the mass spread of the infection, resulting in a recession due to the closing down of offices, factories, and various markets. Due to the outbreak of coronavirus, there has been a disruption in the demand and supply of various APIs, especially from China. This has impacted the revenue of players involved in active pharmaceutical ingredients. However, this is considered to be a temporary effect, and the market is expected to recover soon due to rising concerns regarding the spread of infectious diseases. This creates an opportunity for the API industry to grow over the coming time period.

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How Will Increasing Abbreviated New Drug Applications Boost Demand for APIs?

Every year, CDER - Center for Drug Evaluation and Research - approves new drugs. These drugs have to be ensured of being safe, effective, and superior-quality generic alternatives for affordable treatment options. Over the past few years, there has been a rise in the number of ANDA approvals. ANDA approvals have increased 77.5% from the year 2013. In 2019, around 60% of ANDA approvals were for oral solid dosage forms, and 20 % were for injectable forms. The API market has a lot of scope in the future, owing to the focus of bigger pharma companies on working toward ANDA approvals.

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What is the Impact of Huge Capital Investments on the API Space?

Investment costs for manufacturing APIs depends on various factors. These costs depend on location, infrastructure, size and capacity of manufacturing machines, and degree of automation. Sophistication of any manufacturing unit also depends on the degree of containment, quality of equipment within the facility, and level of cGMP standards. All these factors lead to huge investment costs. As quality is a mandate for API manufacturing, no company would compromise on the quality and standards required for their manufacturing. Using quality standards means investing a lot of money.

Another huge cost in manufacturing is licensing. Processes such as analytical screening and quality assurance require time. Scale-up processes require high capacity equipment that are maintained to ensure zero containment during the batches of manufacturing. Raw materials are the building blocks for APIs, and hence, the quality of raw material matters a lot for their manufacturing.

How are Patent Expiry of Branded Drugs Fueling Sales of Active Pharmaceutical Ingredients?

Demand for APIs will grow because of major changes caused by the expiration of patents of generic drugs. Generic drugs have the same API as the original drug, and hence, patent expiration leads to higher demand for the same API.

In India, a normal patent expires after 20 years. But in the pharmaceutical field, generic version of medicines can enter into the market after 10 years. The innovative drugs market has been affected badly, with less investments in R&D of innovative drugs by major players in the pharmaceuticals space. This has dried up new drugs pipelines, and therefore, demand for generic drugs is on the rise.

For instance, in 2018, Pfizer announced its launch of Retacrit, a biosimilar of Epogen form Amgen for the treatment of anaemia, after Amgen lost its patent. Another example is where Ranbaxy gave tough competition to Pfizer’s Lipitor by launching the generic version of Lipitor called Caduet. Caduet is cholesterol-lowering drug (patent expired in 2011). Ranbaxy’s Caduet later acquired a bigger market share for the same drug. Another blockbuster drug in the large molecules category was Rituxan from Roche. Rituxan’s patent expired in 2015, and later, in 2018, USFDA announced approval of Truxima as the first biosimilar of Rituxan (Rituximab) for the treatment of B cell lymphoma.

active-pharmaceutical-ingredients-api-market

Country-wise Insights

What is the Opportunity for APIs in the U.S.?

The healthcare system of the U.S. is well-known for its advanced infrastructure and high expenditure. Various regulatory rules and insurance policies are adopted to control the care regime of the country. In addition, regulatory bodies of the United States are adopting several cost-effective measures to reduce the burden on healthcare. The volume to a value-based system shift is majorly driven by various policies undertaken by the government, providers, biotechnology companies, and insurance payers.

Furthermore, due to higher prevalence of chronic and infectious diseases, demand for API is increasing in the country. Chronic disorders are the leading cause of death and disability in the United States, and account for a vast majority of healthcare spending in the United States. This factor is creating a huge opportunity for the U.S. API market to progress, which is expected to expand at a CAGR of around 4% over the next ten years.

Why is the API Industry Flourishing in Germany?

The German healthcare space is a universal and well-renowned system that is largely funded by the government. It is one of the most successful healthcare systems in the world. It is not surprising that Germany has the highest level of spending in Europe. Furthermore, rising technological advancements, presence of several major players, increasing chronic disorders and geriatric population, and growing R&D in the country are creating huge opportunity for API players to grow. The market in Germany API is expected to reach 11.6 Bn by the end of 2031.

What Factors make China the Most Dominant Market for APIs?

China is the world’s second-largest pharmaceutical market, and is continually growing, becoming an appealing destination for foreign investment. The country, since the late 1970s, has moved from being a restricted economy to a more market-oriented one. Over the past 3 decades, the Government of China has, at times, allowed access for foreign investors while shutting the doors in sectors where it seeks to develop domestic firms into international giants. China is holding a dominant position in the global active pharmaceutical ingredients market, due to its large-scale manufacturing capacity and adoption of cost effective methods.

Furthermore, availability of commodity intermediates and bulk drugs due to strong technological capability makes China a dominant API industry. China accounted for around 35.2 Bn revenue in 2020, and the market in the country is expected to expand at a CAGR close to 3% through 2031.

What is the Impact of Growing Contract Research Industry on Demand for APIs in India?

In recent years, large and small biopharmaceutical companies have become heavily dependent on CMOs and CDMOs to provide research services for their R&D operations. However, API demand is likely to grow, as most products in the pipeline are about to reach the end stage, and would be available by the end of the decade. It is easier to recruit patients for clinical trials in developing countries. Research and clinical trials have become a major business in India due to factors such as presence of government-funded pharmaceutical and medical institutions with advanced facilities, which serve as ideal centers for clinical trials. In India, costs of R&D are substantially less as compared to those in developed countries; lesser by 50% to 75% as compared to that in the U.S. or the European Union in terms of cost efficiency.

Category-wise Insights

Why Do Small Molecules Hold a Major Market Share?

Demand for recently developed small molecules drugs is rising globally. Small-molecule drugs accounted for 91% of API revenue in 2020. There has been remarkable progress in small molecule API manufacturing for applications such as cardiovascular, oncology, and metabolic disorders. Demand for small molecule API drugs in such applications is unprecedented. Furthermore, increasing number of FDA approvals over the decade has significantly contributed to rising demand for APIs.

Competitive Landscape 

Strategic outsourcing is trending in the pharmaceutical business, as it allows a company to focus on its core competencies, and thus, ultimately increase productivity. Pharmaceutical companies are benefited by outsourcing production as it reduces the need of labor. Companies also save on the cost of installing expensive manufacturing units. Growth of many CDMOs in recent time has accelerated this trend of outsourcing.

Manufacturers are focused on developing generic versions of off patent drugs, both, small molecules and biologics. Pharmaceutical companies are actively participating in mergers and acquisitions to expand their product portfolios and make a strong position in the global market.

Leading players in the domain of active pharmaceutical ingredients are:

  • Pfizer Inc.
  • Boehringer Ingelheim International GmbH
  • Bristol-Myers Squibb Company
  • Cipla Inc.
  • Eli Lilly and Company
  •  F. Hoffmann-La Roche Ltd
  • GlaxoSmithKline plc
  • Hepalink Group
  • Lonza
  • Merck & Co. Inc.
  • Sandoz International GmbH
  • Aurobindo Pharma Limited
  • Fresenius Kabi LLC

*The list is not exhaustive, and only for representational purposes. Full competitive intelligence is available in the report.

Scope of Report

Attribute

Details

Forecast Period

2021-2031

Historical Data Available for

2016-2020

Market Analysis

USD Billion for Value

Key Regions Covered

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia
  • Oceania
  • and the Middle East & Africa

Key Countries Covered

  • US
  • Canada
  • Germany
  • U.K.
  • France
  • Italy
  • Spain
  • Russia
  • China
  • Japan
  • South Korea
  • India
  • Thailand
  • Malaysia
  • Indonesia
  • Australia
  • New Zealand
  • GCC Countries
  • Turkey
  • South Africa

Key Segments Covered

  • API
  • End User
  • Region

Key Companies Profiled

  • Pfizer Inc.
  • Boehringer Ingelheim International GmbH
  • Bristol-Myers Squibb Company
  • Cipla Inc.
  • Eli Lilly and Company
  • F. Hoffmann-La Roche Ltd
  • GlaxoSmithKline plc
  • Hepalink Group
  • Lonza
  • Merck & Co. Inc.
  • Sandoz International GmbH
  • Aurobindo Pharma Limited
  • Fresenius Kabi LLC

Report Coverage

  • Market Forecasts
  • Competition Intelligence
  • Market Value by Each Segment
  • DROT Analysis
  • Market Dynamics and Challenges
  • Strategic Growth Initiatives

Customization & Pricing

Available upon Request

Market by Category

API

  • Small Molecules
    • Controlled Substances
      • Natural Opioids
      • Semi-synthetic/Synthetic Opioids
    • Non-Controlled Substances
      • NSAIDs
      • Anti-infective
      • Antimicrobial
      • Oral Anti-diabetics
      • Anti-hypertensive
      • Others
    • HPAPI
  • Peptides & Oligonucleotides
  • Carbohydrate Drugs
  • Steroidal Drugs

End User

  • Pharmaceutical Companies
  • Biopharmaceutical Companies
  • Contract Manufacturing Organizations (CMOs)
  • Contract Development & Manufacturing Organizations (CDMOs)

Region

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia
  • Oceania
  • The Middle East and Africa (MEA)

Key Questions Answered in Report

Q1. Which is the most lucrative market for active pharmaceutical ingredients?

China currently leads the global active pharmaceutical ingredients market. Sales in China are estimated to be 76.8% of East Asia’s sales by the end of the forecast period.

Q2. Which is the dominating API in the market?

Small molecules APIs are the most dominant segment in every market, owing to rising FDA approvals and their advantages over other molecules.

Q3. Which end user is driving revenue of active pharmaceutical ingredient manufacturers?

Pharmaceutical companies are leading the market, owing to their growing presence across the globe.

Q4. Which are some of the leading companies offering APIs? 

Some of the leading companies offering active pharmaceutical ingredients are Pfizer Inc., Boehringer Ingelheim International GmbH, Bristol-Myers Squibb Company, Cipla Inc., Eli Lilly and Company, F. Hoffmann-La Roche Ltd, GlaxoSmithKline plc, Hepalink Group, Lonza, Merck & Co. Inc., Sandoz International GmbH, Aurobindo Pharma Limited, and Fresenius Kabi LLC

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Is this research conducted by Persistence Market Research?

Yes, the research has been conducted by expert analysts of Persistent Market Insights, through a combination of primary and secondary research. To know more about how the research was conducted, you can speak to a research analyst.

What research methodology is followed by Persistence Market Research?

Persistence Market Research follows a methodology that encompasses the demand-side assessment of the market, and triangulates the same through supply-side analysis. This methodology is based on the use of standard market structure, methods, and definitions. Request a detailed methodology.

Who are the respondents for primary research?

Persistence Market Research speaks to stakeholders across the spectrum, including C-level executives, distributors, product manufacturers, and industry experts. For a full list of primary respondents, please reach out to us.

What are the sources of secondary research?

Persistence Market Research conducts extensive secondary research through proprietary databases, paid databases, and information available in the public domain. We refer to industry associations, company press releases, annual reports, investor presentations, and research papers. More information about desk research is available upon request

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