Active Pharmaceutical Ingredient Market Could Reach US$ 384.51 Billion by 2033

The global active pharmaceutical ingredient market size was evaluated at US$ 214.72 billion in 2023 and is expected to reach valuation around US$ 384.51 billion by 2033, growing at a CAGR of 6.08% from 2024 to 2033. The integration of Active Pharmaceutical Ingredients (APIs) plays a pivotal role as a growth factor across various medical domains, including oncology, cardiology, CNS and neurology, orthopedics, pulmonology, gastroenterology, nephrology, ophthalmology, and endocrinology.

Market Overview

The active pharmaceutical ingredient market is experiencing rapid growth due to its pivotal role as the primary component in medications, responsible for delivering the desired therapeutic effects. APIs, also known as drug substances or pharmacologic substances, are the biologically active elements within various pharmaceutical firms, such as tablets, capsules, creams, and injectables. They exert their pharmacological effects, influencing bodily functions and treating diseases. With some medications containing multiple APIs acting in diverse ways within the body, active ingredient prescribing emerges as a strategy to mitigate medication errors. Different brand names and many medicines share the same active ingredients, underscoring the significance of APIs in pharmaceutical formulations and their potential for standardization across the industry.

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APIs serve as the cornerstone of high-quality drugs, delivering pharmacological activity essential for diagnosing, treating, and preventing diseases while also influencing bodily functions. By leveraging APIs, the healthcare sector can foster innovation, thereby enhancing healthcare systems' sustainability by developing more advanced and effective therapeutic products.

• In January 2024, Teva announced its intention to divest its API business as part of its pivot to a growth strategy.

Key Insights

• The U.S. active pharmaceutical ingredients market size was valued at USD 37.01 billion in 2023 and is expected to reach around USD 71.35 billion by 2033.
• U.S. active pharmaceutical ingredients market is expected to grow at a CAGR of 6.86% from 2024 to 2033.
• North America dominated the active pharmaceutical ingredient market in 2023 with the dominant share 38.31%.
• Asia Pacific is expected to grow at the fastest CAGR 6.37% during the forecast period.
• By type of synthesis, the synthetic API segment accounted for the largest market share 71.73% in 2023.
• By type of manufacturer, the captive API segment dominated the market with the largest market share 57.26% in 2023.
• By application, the cardiovascular diseases segment exhibited the largest market share 20.99% in 2023.

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Regional Stance

North America emerged as the dominant player in the global active pharmaceutical ingredient market in 2023. A lot of large-scale API sites are situated in the United States. This disparity is attributed to global pricing pressures favoring non-US manufacturers, benefiting from government subsidies, lower input costs, and lighter regulatory frameworks. Solutions necessitate bolstering domestic manufacturing infrastructure to safeguard U.S. healthcare security, fostering fair global competition, and nurturing sustainable domestic markets. While U.S. sources predominantly involve controlled substances or niche APIs suited for smaller-scale production, the reliance on overseas factories for APIs remains substantial, urging policymakers and the media to scrutinize the medical supply chain. With these challenges, biopharmaceutical companies have fortified global supply chains, with the U.S. witnessing a notable 50% increase in pharmaceutical manufacturing facilities, including those for APIs, over the past five years.

In Asia Pacific, the active pharmaceutical ingredient market is poised for rapid growth and is projected to outpace other regions with the fastest CAGR during the forecast period. The competitive prowess of Indian and Chinese manufacturers on the global stage has induced pricing pressures on Western counterparts, prompting a significant shift in global pharmaceutical production towards Asia. This trend is particularly evident with newer APIs, where Asian manufacturers dominate or witness faster migration. While Europe and Asia emerge as primary hubs for API production, the balance tilts towards Asia for most APIs, underscoring the region's pivotal role in the pharmaceutical landscape.

Report Highlights     

By Type of Synthesis

The synthetic segment emerged as the dominant force in the global active pharmaceutical ingredient market in 2023, primarily due to the ease of accessing raw materials and simplified synthesis processes. These chemically synthesized compounds are crafted through diverse chemical reactions, exemplified by medications like aspirin, paracetamol, and numerous antibiotics. With a focus on pharmaceutical fine chemicals and chemically synthesized APIs and intermediates, synthetic APIs hold sway over the market, reflecting advancements in technology and manufacturing processes within the pharmaceutical industry.

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By Type

By type, the innovative APIs segment dominated the active pharmaceutical ingredient market in 2023. Innovative APIs take the lead globally, thanks to robust government regulations, established R&D infrastructures, and enhanced subsidies facilitating innovative drug development. Innovator drugs featuring specific active ingredients and having secured initial approval for use spearhead this segment. These drugs undergo exhaustive testing to ensure efficacy, safety, and quality, accompanied by the acquisition of drug patents by the originating company, shielding their market exclusivity for up to 20 years. This patent protection safeguards against competition, granting the founding company exclusive rights to manufacture and distribute the drug until the patent expiration, setting the stage for sustained market dominance and profitability.

On the other hand, generic APIs stand as the chemical constituents previously protected by patents. These generic drugs comprise identical active ingredients as their innovator counterparts, embodying the same pharmacological effects. The core of a generic drug is its active ingredient, which drives its therapeutic efficacy. Following the expiration of patents, multiple companies gain the ability to produce these generic drugs, fostering competition and widening access to affordable medications. This dynamic landscape of generic APIs underscores their equivalence to innovator drugs, promoting pharmaceutical accessibility and affordability post-patent expiry.

By Type of Manufacturers

The captive API segment dominated the active pharmaceutical ingredient market in 2023, representing APIs utilized internally by pharmaceutical companies for producing finished dosage forms. This contrasts with the Merchant API market, where APIs are sold by third-party suppliers. With an increasing number of firms prioritizing cost reduction and contamination risk mitigation, investments in innovative chemical methodologies for in-house API production are on the rise. Advancements in protein synthesis and artificial intelligence are poised to further streamline development processes, offering enhanced control and efficiency, thereby shaping the future of API manufacturing.

The merchant API segment is forecasted to experience the most rapid growth in the coming years. This segment offers significant advantages by eliminating the necessity for substantial investments in costly equipment and intricate infrastructure. As a result, pharmaceutical companies can streamline their operations and focus resources on core competencies, thereby enhancing efficiency and agility in responding to market demands.

By Application

The cardiovascular diseases segment dominated the active pharmaceutical ingredient market in 2023, driven by the widespread use of cardiovascular drugs in treating conditions like heart failure and vascular disorders. This class of medications encompasses cardiac glycosides, vasodilators, vasoconstrictors, and a diverse range of cardiovascular molecules such as statins, ACL inhibitors, calcium channel blockers, angiotensin II receptor antagonists, anticoagulants, beta-blockers, lipid modifiers. This underscores the critical role of APIs in addressing a wide spectrum of cardiovascular ailments, reflecting the significant market share held by cardiovascular drugs within the API industry.

The oncology segment is anticipated to exhibit the fastest CAGR in the forecast period. Within this segment, anticancer drugs stand out as crucial components of APIs meticulously designed to combat cancer cells. These potent medications play a pivotal role in cancer treatment by specifically targeting and eradicating malignant cells, impeding their proliferation and metastasis. Anticancer drugs encompass various categories, including chemotherapy drugs, targeted therapy drugs, immunotherapy drugs, and hormonal therapy drugs, each tailored to disrupt cancerous cell growth through distinct mechanisms of action.

Active Pharmaceutical Ingredients Market, by Application, 2020-2023 ($BILLION)

Market Dynamics

Driver

The crucial role of APIs in the pharmaceutical industry

APIs serve as the fundamental building blocks of pharmaceutical products, profoundly influencing their therapeutic properties and clinical efficacy. The meticulous selection and precise dosing of APIs are paramount in ensuring the safety and effectiveness of medications. APIs, intricately linked with drug products, constitute the active agents encapsulated or formulated within them. While APIs deliver therapeutic benefits, drug products incorporate a myriad of components, such as excipients, binders, fillers, and coatings, to optimize delivery, stability, and patient adherence. The synergistic interplay between APIs and drug products not only addresses medical needs but also enhances patient outcomes, thus propelling the growth of the active pharmaceutical ingredient market.

• In October 2023, Farmabios, an Axplora company, received cGMP approval from AIFA for expanded production capacity in HPAPIs and Steroids.

Restraint

Challenges in the manufacturing of APIs

The production of APIs faces significant hurdles, primarily due to stringent regulatory standards enforced by agencies such as the European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA). Compliance with these regulations is paramount to ensure the consistency, safety, and efficacy of APIs. Adhering to Good Manufacturing Practices (GMP) necessitates substantial investments in robust quality management systems. Manufacturers must meticulously document controls, methodologies, and validation procedures outlined in GMP guidelines to maintain regulatory compliance effectively. Critical aspects include conducting periodic audits, maintaining comprehensive records, and validating manufacturing procedures. These stringent requirements serve as restraints, constraining the growth of the active pharmaceutical ingredient market.

Opportunity

Continuous processing innovations for small-molecule APIs

The promising potential exists in the pharmaceutical business for small-molecule APIs due to ongoing processing advances. These developments enable photochemical, electrochemical, and serial biochemical catalysis by fusing flow chemistry with cutting-edge reaction mechanisms and reactor configurations. While membrane separations take the role of conventional distillation or crystallization operations in downstream processes, the development of hybrid batch-continuous reactors or intermittent-flow stirred tank reactors permits heterogeneous reactions in upstream processes. It is expected that periodic continuous-chromatography formats would be converted to completely continuous formats, including counter current tangential chromatography, in the biologics production process. Through the management of physical material feedback, these developments present prospects for improved API output, more economical use of raw materials, decreased waste formation, and improved process control. The market for active pharmaceutical ingredients is further fueled by the acceptance of recirculation in unit operations.

• In January 2024, Willow Biosciences Inc. revealed a collaboration with a leading Active Pharmaceutical Ingredient (API) manufacturer to develop a more sustainable and cost-effective manufacturing route for their largest globally sold product

Recent Developments

• In November 2022, Advent International introduced Cohance Lifesciences, a new brand identity for its API and CDMO platform, consisting of three portfolio companies: RA Chem Pharma, ZCL Chemicals, and Avra Laboratories.
• In January 2023, Sterling finalized the acquisition of an API manufacturing facility in Ringaskiddy, Ireland.
• In April 2024, Evonik bolstered its solutions offering with the introduction of a new Botanicals & Natural Actives business segment.
• In February 2024, Novo Nordisk’s parent company acquired Catalent to enhance the supply of Wegovy.

Key Players in the Active Pharmaceutical Ingredient Market

• Albemarle Corporation
• Aurobindo Pharma
• Reddy’s Laboratories Ltd.
• AbbVieInc
• Teva Pharmaceutical Industries Ltd
• Mylan N.V.
• CiplaInc
• BoehringerIngelheim International GmbH
• Merck & Co., Inc
• Sun Pharmaceutical Industries Ltd
• Bristol-Myers Squibb Company

Market Segmentation

By Type of Synthesis

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

By Type of Manufacturer

• Captive APIs
• Merchant APIs
• Generic APIs
• Innovative APIs

By Type

• Generic APIs
• Innovative APIs

By Application

• Cardiovascular Diseases
• Oncology
• CNS & Neurological Disorders
• Orthopedic Disorders
• Endocrinology
• Pulmonology
• Gastrointestinal Disorders
• Nephrology
• Ophthalmology
• Others

By Geography

North America

• U.S.
• Canada

Europe

• Germany
• France
• United Kingdom
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• Southeast Asia
• Rest of Asia Pacific

Latin America

• Brazil
• Rest of Latin America

Middle East & Africa (MEA)

• GCC
• North Africa
• South Africa
• Rest of Middle East & Africa

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