Active pharmaceutical ingredients, also known as APIs, are the biologically active components of pharmaceutical drugs. APIs provide the desired therapeutic effects in pharmaceutical products and are responsible for the intended physiological effects of pharmaceutical treatments. The rising prevalence of chronic diseases and growing generic drug market have led to substantial demand for APIs. The global API market is growing rapidly owing to the need for affordable healthcare and increasing focus on generics.
The global API industry largely caters to the off-patent generic drug market. APIs are necessary for the manufacturing of generic drugs and represent a major cost component. The expiration of patents for blockbuster drugs and subsequent availability of low-cost generic versions have boosted API demand. Further, initiatives by governments worldwide to promote generics in order to provide cost-effective treatment options have accelerated API consumption. The growing generics market and easing regulatory approval processes for generic drugs are supporting continued growth of the API industry.
The global active pharmaceutical ingredients market is estimated to be valued at US$ 268.05 billion in 2024 and is expected to exhibit a CAGR of 6.8% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the active pharmaceutical ingredients market include Teva Pharmaceutical Industries Ltd., copyright, Inc., Dr. Reddy's Laboratories Ltd., Novartis AG, Mylan N.V., Amneal Pharmaceuticals LLC, Lonza Group, Lupin Limited, Fresenius Kabi, Hikma Pharmaceuticals, Cipla Limited, Glenmark Pharmaceuticals Limited, Sun Pharmaceutical Industries Ltd., Endo International plc, Aurobindo Pharma Limited, Apotex Inc, Taro Pharmaceutical Industries Ltd, Stada Arzneimittel AG, Krka Pharmaceuticals, CordenPharma International, Evonik Industries AG, and Biological E. Limited.
The rising incidence of chronic diseases and increasing geriatric population are fueling Active Pharmaceutical Ingredients Market Demand for affordable treatment options. This is driving uptake of generics and subsequent API consumption globally. Additionally, growing penetration of health insurance is supporting demand for low-cost generics in several countries.
API manufacturers are focusing on expanding production facilities in key markets to ensure timely supply and gain greater share of the global generics drug market. This includes strategic investments and partnerships between innovator firms and API providers to establish local manufacturing presence.
Market Key Trends
Growing investments by API manufacturers in continuous manufacturing, process automation, and advanced biomanufacturing technologies are expected to be a major trend driving the active pharmaceutical ingredients market over the forecast period 2024 to 2031. Continuous processing lessens production costs and enhances efficiency by reducing processing times. Additionally, ongoing R&D for complex APIs like peptides and oligonucleotides will support revenue growth of innovator API providers in the coming years. Sustained collaborations between API suppliers and generics firms for joint development of complex drug molecules are also expected to bolster market trends.
Porter’s Analysis
Threat of new entrants: High capital requirement and economies of scale prevent new players from entering this market easily.
Bargaining power of buyers: Many buyers present in the market so buyers possess moderate bargaining power.
Bargaring power of suppliers: Few suppliers produce raw materials for APIs so they possess moderate bargaining power.
Threat of new substitutes: No major substitutes available as APIs are required for all prescription medicines thus threat of substitutes is low.
Competitive rivalry: Presence of many large generic players worldwide has led to intense competition in the market.
Geographical Regions
North America holds the largest share of the global active pharmaceutical ingredients market in terms of value due to increased R&D expenditure and advanced healthcare facilities in United States and copyright. The U.S. is the major contributor to the North American API market owing to favorable reimbursements and presence of many API manufacturers. Asia Pacific region is anticipated to witness fastest growth during the forecast period majorly due to expanding generic drug manufacturing capabilities in India and China. The growing pharmaceutical industry and low labor & manufacturing costs are propelling API market in Asia Pacific region.
Europe remains the second largest regional market for APIs. High healthcare spending and availability of advanced technologies have propelled Germany, U.K., France to hold major shares of European API market. Latin America and Middle East & Africa are projected to offer lucrative opportunities for API manufacturers owing to increasing healthcare expenditures and growing pharmaceutical industry in Brazil, Mexico, Saudi Arabia and South Africa.
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