Active Pharmaceutical Ingredients (API) Market

The global Active Pharmaceutical Ingredients (API) Market is valued at USD 155.2 Billion in 2023 and is projected to reach a value of USD 314.24 Billion by 2032 at a CAGR (Compound Annual Growth Rate) of 8.15% between 2024 and 2032.

Key highlights of Active Pharmaceutical Ingredients (API) Market

• North America dominated the market in 2023, obtaining the largest revenue share of 40.2%
• The Asia Pacific region will witness remarkable growth with a CAGR during the forecast period
• In 2023, cardiovascular diseases dominated the Active Pharmaceutical Ingredients (API) market with significant market share of 22.2%
• The shift towards personalized medicine and targeted therapies drives demand for APIs

Active Pharmaceutical Ingredients (API) Market: Regional Overview

North America Dominated Sales with a 40.2% share in 2023. North America is anticipated to hold a significant market owing to factors such as the prevalence of chronic diseases such as cancer, diabetes, cardiovascular and neurological diseases coupled with the ageing population. For instance, in July 2022 by the Canadian Institute for Health Information indicates that over 2.4 million Canadians suffer from cardiac disease in 2022. This increases the need for APIs in the production of cardiovascular and cancer medications, which is expected to drive market expansion in North America.

The region's presence of major market participants and the high cost of healthcare are expected to contribute to the market's growth.

People work with active pharmaceutical ingredients (APIs) and their intermediates understand and abide by Part C, Division 2 of the Food and Drug Regulations (the Regulations), which deals with good manufacturing practices (GMP), the Government of Canada released guidelines for active pharmaceutical ingredients (GUI-0104) in February 2022. Fabricators, packagers/labelers (including repackages/re-labelers), testers, importers, distributors, and wholesalers are all covered by this manual. Over the course of the projection period, it is anticipated that government endeavor will raise the demand for finished goods and expand the Active Pharmaceutical Ingredients (API) market.

Furthermore, it is anticipated that expanding manufacturing facilities and stepping up business initiatives to boost API production will support market expansion. For instance, Eurofins stated in January 2023 that it had enlarged and moved its API development laboratory to a new location in Ontario, Canada.

Piramal Pharma declared in May 2022 that a new active pharmaceutical ingredient (API) factory at its Aurora, Ontario, location had successfully finished its first production runs after coming online. As a result, the market is anticipated to expand during the course of the forecast period due to growing government initiatives, an increase in the prevalence of cardiovascular and cancer disorders, and expanding corporate manufacturing facility expansion activities.

U.S. Active Pharmaceutical Ingredients (API) Market Overview

The U.S. Active Pharmaceutical Ingredients (API) market, valued at USD 26.84 Billion in 2023 to USD 55.07 Billion in 2032, is anticipated to grow at a CAGR of 8.3% from 2024 to 2032. The U.S. Active Pharmaceutical Ingredients (API) market is driven by technological advancements, regulatory updates, and rising prevalence of chronic diseases, making it a pivotal player in the pharmaceutical industry.

For instance, the American Cancer Society released estimates for 2024 that indicate there would be roughly 2,001,140 new cases of cancer identified in the US in 2024, including 353,820 cases linked to the digestive system, 313,510 cases connected to the breast, and 252,950 cases related to the respiratory system. Similarly, the rising prevalence of chronic diseases like Alzheimer's, estimated to affect 6.2 million Americans over 65 and projected to reach 12.7 million by 2050, fuels demand for specific APIs like donepezil, further shaping market dynamics and growth trajectories.

Boasting a diverse array of manufacturers catering to both domestic and international needs, the market prioritizes innovation and adherence to stringent FDA regulations. This emphasis on quality is bolstered by significant investments in research and development, particularly in specialized APIs and biologics, to meet the changing healthcare landscape.

Active Pharmaceutical Ingredients (API) Market: Therapeutic Application Overview

The cardiovascular diseases segment dominated the Active Pharmaceutical Ingredients (API) market with the largest share of 22.2% in 2023. The Active Pharmaceutical Ingredients (API) market, segmented by the Therapeutic Application, is bifurcated into Communicable Diseases, Oncology, Diabetes, Cardiovascular Diseases, Pain Management, Respiratory Diseases and Other Therapeutic Applications.

The cardiovascular diseases category had the highest revenue share because of the increasing prevalence of cardiovascular problems and the extensive use of various CVD drugs.

Cardiovascular diseases (CVDs) are the leading cause of death globally due to poor eating habits, obesity, physical inactivity, growing alcohol and tobacco consumption, and improper eating habits. For instance, 17.9 million deaths globally were linked to CVDs, according to WHO estimates. 55% of these deaths were caused by heart attacks and strokes.

Drugs for cardiovascular disease are necessary for both treating and preventing it. Based on data from 84 of the countries covered by the World Medicines Situation Report, cardiovascular medications were the second most often used class of medication in the non-hospital sector. By 2024, sales of branded cardiovascular drugs are expected to exceed US$90 billion.

For the treatment or prevention of CVDs, 400 active pharmaceutical ingredients (APIs) or API combinations are listed in the British National Formulary (77/2019) and the WHO Anatomical Therapeutic Chemical (ATC) classification list5. Because cardiovascular problems are more common, there is a greater need for active pharmaceutical ingredients.

Active Pharmaceutical Ingredients (API) Market: Government Initiatives

• In September 2020, the Government of India introduced a Rs 6,940-crore Production Linked Incentive (PLI) scheme to enhance domestic drug manufacturing. By encouraging domestic manufacturing of essential Key Starting Materials (KSMs), Drug Intermediates, and Active Pharmaceutical Ingredients (APIs) in India, the program seeks to lessen dependency on imports. The government has put in place two more incentive programs to create bulk drug parks and support domestic API production.
• The Austrian government is contributing 50 million euros (100 million euros from industry) to the expansion of local API production at the penicillin manufacturing site in Kundl, Tyrol, Austria.
• In June 2022, the French public investment bank "EPIC Bpifrance," the French government owns a 12% stake in EuroAPI, a European manufacturer of APIs that was founded by Sanofi. The bank promised to lock up EuroAPI shares for 24 months.
• In December 2020, the European Investment Bank (EIB) introduced a ground-breaking program to support local manufacture of Active Pharmaceutical Ingredients (APIs) in Africa in order to improve medicine manufacturing and increase public health outcomes. Developed in partnership with the kENUP Foundation, the EIB's ground-breaking EUR 50 million pharmaceutical investment effort aims to reduce dependency on imported medications and reduce vulnerabilities in medical supply chains that have been made worse by the COVID-19 pandemic. The goal of this program is to improve public health across the African continent by removing obstacles in the supply chain that impede access to specialist pharmaceuticals.
• On April 5, 2023, the Canadian Critical Drug Initiative (CCDI) was introduced to facilitate the development and commercialization of new drugs in Canada, addressing the nation's shortage of manufacturing capacity. This initiative responds to the vulnerabilities exposed by the COVID-19 pandemic in global drug supply chains and aims to bolster Canada's capacity for developing and manufacturing small-molecule therapeutics domestically.
• In March 2023, an Edmonton-based initiative secured over $80.5 million in federal funding, empowering early-stage companies to introduce new pharmaceutical products to the market and cultivate talent within Alberta's life sciences sector.
• In 2023, the federal government unveiled a $2.2 billion biomanufacturing and life sciences strategy, encompassing various funding initiatives. These included $1 billion over seven years through the Strategic Innovation Fund to bolster domestic life sciences and bio-manufacturing firms, $500 million over four years allocated to the Canada Foundation for Innovation to support the bio-science capital and infrastructure needs of post-secondary institutions and research hospitals, and $50 million over five years dedicated to establishing a life sciences stream in the Venture Capital Catalyst Initiative.
• The Quebec government earmarked $118 million in 2020 to bolster the life sciences industry, alongside implementing several tax measures, while the BC government launched the InBC Investment fund with a $500 million allocation over three years to invest in tech startups, green companies, and the life sciences sector.

Key Trends

• There is a growing trend towards specialty API because specialty APIs tailored to specific patient populations and disease states as advancements in healthcare drive the development of precision medicine and targeted therapies.
• Pharmaceutical companies are increasingly turning to contract manufacturing organizations (CMOs) for API production to streamline operations, reduce costs, and access specialized expertise and manufacturing capabilities.
• The adoption of digital technology including AI, automation, and data analytics is revolutionizing API production methods. In API manufacturing facilities, these technologies facilitate increased productivity, lower costs, and better product quality through real-time tracking, predictive maintenance, and process optimization.

Premium Insights

The global need for safe and effective medications is being driven by the rising incidence and burden of infectious diseases, genetic disorders, and chronic diseases. This, in turn, is pushing up demand for active pharmaceutical ingredients. For example, the International Diabetes Federation (IDF) released statistics for 2022, which indicate that the number of diabetes patients will increase to 643 million by 2030 and 784 million by 2045. Furthermore, the Australian Bureau of Statistics revealed in December 2023 that approximately 1.3 million Australians, or 5.3% of the population, had diabetes in 2022.

Businesses are being compelled to take strategic measures for the production and development of APIs due to the growing development and clinical trials of biologic and biosimilar medications for novel therapeutic classes, which is anticipated to fuel market expansion. For instance, Aurobindo Pharma's wholly owned subsidiary CuraTeQ Biologics invested over INR 300 (USD 3.82) crore in September 2022 to expand the capacity of biologics manufacturing facilities. The business was also given permission to start contract manufacturing activities for biologicals. Similarly, Novartis invested $300 million in September 2022 to expand its capacity for biological medicine development and production. It is projected that increased acceptance of biologics would result from investments in bettering biologic manufacturing and increasing biologic approvals, which will raise the need for APIs for development.

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Market Dynamics

The emphasis on precision medicine propels demand for APIs tailored to individual patients, driving innovation in drug development and personalized treatments

Precision medicine involves tailoring medical treatments to individual patients based on their genetic makeup, environment, and lifestyle. By directing treatments toward the patients who stand the best chance of benefiting from them, this strategy seeks to enhance treatment outcomes and reduce side effects. Demand for certain APIs that facilitate the creation of customized medications is driven by the focus on precision medicine in theActive Pharmaceutical Ingredients (API) market. In order to find APIs that may be utilized in precision medicine treatments, pharmaceutical companies spend in research and development. This opens up chances for API producers to produce and provide these specialized chemicals.

Stringent drug price controls constrain profitability and investment in the Active Pharmaceutical Ingredients (API) market, potentially hindering research and development efforts

Drug price control policies, implemented by governments and regulatory agencies, aim to contain healthcare costs and ensure access to affordable medications. However, these regulations may present difficulties for manufacturers of APIs and pharmaceuticals, especially if they result in lower profit margins and pricing pressure. The expansion of the Active Pharmaceutical Ingredients (API) industry is hindered by unfavorable medication price control laws that restrict the pricing flexibility of APIs and finished pharmaceutical products.

The rise of biosimilars presents a growth opportunity for API manufacturers, as demand increases for ingredients used in the production of cost-effective alternatives to biologic drugs

Biosimilars are biological products that are highly similar to an already approved biologic drug, with no clinically meaningful differences in terms of safety and efficacy. Biosimilars offer cost-effective alternatives to expensive biologic drugs, providing patients with increased access to essential treatments. Specialized APIs are needed for the creation of biosimilars, which creates a demand for producers who can produce these chemicals in large quantities while maintaining regulatory compliance. For instance, Biocon Biologics and Yoshindo, a Japanese pharmaceutical firm, signed a strategic out-licensing deal in October 2022 to market Ustekinumab and Denosumab, two of Biocon Biologics' pipeline biosimilar assets, in Japan. Additionally, bevacizumab (Abevmy), a biosimilar to Avastin (Roche), was introduced in May 2022 in Canada by Biocon Biologics and Viatris to treat various cancers. As biosimilar adoption continues to grow worldwide, API manufacturers have the opportunity to expand their product portfolios and capture a larger share of the market.

Competitive Landscape

The competitive landscape of the Active Pharmaceutical Ingredients (API) market is marked by intense competition fueled by a combination of factors such as stringent regulatory requirements, increasing demand for generic drugs, and the emergence of complex biologic drugs. Established players like Teva Pharmaceutical Industries, Pfizer, and Novartis dominate with their extensive manufacturing capabilities and global presence, while also investing heavily in research and development to maintain a competitive edge. Simultaneously, contract manufacturing organizations (CMOs) such as Lonza Group and Catalent leverage their expertise in API production to cater to the growing demand for outsourcing services, offering cost-effective solutions and flexible manufacturing capacities.

The key players in the global Active Pharmaceutical Ingredients (API) market include - Pfizer, Inc., Zydus, Novartis AG, Sanofi, Boehringer Ingelheim, Bristol-Myers Squibb, Eli Lilly and Company, GlaxoSmithKline p/c, Merck & Co., Inc., AbbVie Inc., F. Hoffmann-La Roche Ltd., and AstraZeneca ple,Teva Pharmaceutical Industries Ltd. among others.

Recent Market Developments

Sterling Pharma Solutions Acquires Novartis API Manufacturing Facility in Ireland

• In April 2022, Sterling Pharma Solutions purchased Novartis's active pharmaceutical ingredient (API) manufacturing facility in Ringaskiddy, Ireland. As per the agreement, Novartis is still producing a number of APIs for drugs related to immunology, oncology, and cardiovascular health in Ringaskiddy.

Pfizer and Acuitas Ink Agreement for Lipid Nanoparticle Delivery Method for mRNA Vaccines

• In 2022, Pfizer and Acuitas signed a contract for Pfizer to supply a lipid nanoparticle delivery method for use in medicines and mRNA vaccines like COMIRNATY (tozinameran).

Other Recent Developments

• In April 2023, Apitoria Pharma Private Limited, Aurobindo Pharma's wholly-owned subsidiary, has been authorized to receive two API units (Unit V and XVII).
• In 2022, In order to expedite and improve the research and commercialization of IgM antibody agonists for oncology, immunology, and inflammation targets, Sanofi and IGM announced a strategic collaboration agreement.
• In 2022, Mabgenesis and Boehringer Ingelheim worked together to create unique monoclonal antibodies for use in therapeutic canine therapies.

The global Active Pharmaceutical Ingredients (API) market can be categorized as Type, Potency, Type of Synthesis, Product, Expression Systems, Type of Drug, Therapeutic Application and Region.