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The global active pharmaceutical ingredient (API) market size was USD 164.20 billion in 2018 and is projected to reach USD 261.28 billion by 2026, exhibiting a CAGR of 6.1% during the forecast period.
The active pharmaceutical ingredients also known as bulk drugs, are manufactured either through a biological or a chemical process. The market is likely to exhibit a positive outlook with the growing trend towards the development of innovative therapeutic drugs by various pharmaceutical and biotechnology companies. The rising prevalence of chronic disorders and the growing demand for personalized medicine, coupled with the emergence of novel drug delivery devices are some of the factors expected to play a vital role in boosting the active pharmaceutical ingredient (API) market growth during the forecast period.
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Steady Shift towards Outsourcing the Active Pharmaceutical Ingredient Production is Observed Globally
As the pharmaceutical industry is moving ahead, various countries have implemented stringent regulations on the production of active pharmaceutical ingredient. The regulations have been enforced to develop high quality of APIs, thus enhancing the potential clinical effectiveness of the final product. This is further augmented by the increasing overhead costs of in-house active pharmaceutical ingredient manufacturing, which has led the pharmaceutical companies to reduce their focus on in-house manufacturing. This is resulting in many pharmaceutical companies outsourcing the API manufacturing. Asia Pacific has witnessed tremendous growth in API manufacturing, as companies situated in the western countries, have cited a comparatively low cost alternative for outsourcing production. Currently, a large number of manufacturers have their robust footprints in China & India which is propelling many biopharmaceutical industries to seek outsourcing partnership with contract development and manufacturing organizations (CDMOs). These possess the technical know-how and capabilities for large-scale manufacturing, which is anticipated to upsurge the market growth of active pharmaceutical ingredient (API) during the forecast period.
Growing Demand for Pharmaceutical Drugs is projected to Accelerate Growth
The burden of chronic diseases worldwide is rising rapidly owing to the increase in geriatric population, growing adoption of sedentary lifestyle, coupled with urbanization. This is creating an ever increasing demand for therapeutic drugs in the API market. According to the Indian Brand Equity Foundation (IBEF), the Indian pharmaceutical industry is projected to register a significant CAGR of 22.4% during 2015-2020. China’s pharmaceutical industry is the only second fastest growing industry after India. The increasing complexity of chronic diseases and alarming rise in new cases of these diseases, have led to the rising demand for innovative drugs including biological drugs. Increasing demand for biologics and biosimilars is likely to drive the market growth during the forecast period. There has been an increase in the usage of imported raw pharmaceutical ingredients from emerging economies for the development of highly advanced biopharmaceutical products. Moreover, growing emphasis on research and development activities by many pharmaceutical firms for the introduction of innovative drugs in the market is likely to drive the API market growth during the forecast period.
Growing Prevalence of Chronic Disease to Fuel Demand for Active Pharmaceutical Ingredient Globally
The rising prevalence of cancer, infectious diseases, and various other chronic disorders across the globe is likely to increase the demand for active pharmaceutical ingredient for the development of innovative drugs. According to the National Cancer Institute, an estimated 1,735,530 new cancer cases were diagnosed in the U.S. in 2018. This number is expected to rise to 23.6 million by 2030 which is likely to provide potential opportunities to various pharmaceutical & biotechnology industries for the production of dosage forms of new chemical entities in high-end therapy areas, such as oncology and cardiovascular diseases.
The growing per capita healthcare expenditure in emerging countries, along with the increasing diagnosis rates in these countries is presenting a large population requiring treatment. This is further anticipated to augment the demand for pharmaceutical drugs in the global market. The ever-increasing demand for pharmaceuticals will subsequently drive the demand for generic and branded API’s in the market.
Price Fluctuations in Emerging Nations to Restrict Market Growth
The unexpected and frequent changes in drug pricing policy in emerging nations where majority of manufacturers of APIs are situated, is anticipated to hinder the market growth during the forecast period. Developed nations are heavily dependent on China for the active pharmaceutical ingredient production and any price change policies being implemented in the country, are projected to have a negative impact on the overall market growth of the API.
Generic API to Exhibit Significant Growth Rate during the Forecast Period
Based on type, the market is segmented into generic API and branded API. The branded API segment dominated the active pharmaceutical ingredients (API) market share in 2018. There has been an extensive focus on R&D for the development of various cost effective and innovative APIs. It is driving many players to launch innovative drugs in the market. The growing therapeutic application of novel generation of APIs including peptides and high potency APIs, is likely to play a crucial role in accelerating 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 active pharmaceutical ingredients during the forecast period. However, with several key drugs going off-patent and consolidation in the pharmaceutical Industry, the demand for branded APIs has slowed down significantly over the years. Consequently, the generic APIs segment is likely to exhibit a significant growth rate during the forecast period owing to patent expiry of branded drugs and a rise in demand for low cost generic drugs globally.
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Synthetic API Set to Hold Significant Share in the Market during the Forecast Period
In terms of synthesis, the market is segmented into synthetic and biological. The market is dominated by synthetic API segment, owing to low production cost of chemically synthesized API and comparatively low cost of the raw materials used for the production of synthetic active pharmaceutical ingredient. The biological synthetic active pharmaceutical ingredient segment is estimated to register a comparatively higher growth rate during 2019-2026, attributed to the rise in demand for biopharmaceuticals and the growing number of innovations in biologics to address the high unmet medical needs existing for various diseases conditions. Moreover, the increase in the number of FDA approvals for biological drugs including vaccines, blood components, and recombined proteins is likely to boost the biological active pharmaceutical ingredient segment growth at a significant rate during the forecast period.
North America Active Pharmaceutical Ingredients (API) Market Size, 2018 (USD Billion)
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The active pharmaceutical ingredient (API) market size in North America stood at USD 79.80 billion in 2018. The API market in the region in characterized by the growing incidence of chronic diseases and increasing government initiatives for the development of innovative drugs. Additionally, the rapid adoption of biological drugs among patients for the treatment of various chronic disorders is driving the demand for biological API segment in North America. The market in Asia Pacific is projected to outpace the mature market in North America and Europe, by registering the highest CAGR throughout the forecast period. The increasing number of contract manufacturing organizations & pharmaceutical industries in various countries such as China and India is likely to propel the market in Asia Pacific. These countries have become an attractive destination for outsourcing the active pharmaceutical ingredients manufacturing due to factors including lower labor cost and the abundance availability of raw material for active pharmaceutical ingredient production. Moreover, favorable regulatory policies in Asia Pacific are encouraging many manufacturers to expand their manufacturing capacities in the region, boosting the market growth of active pharmaceutical ingredients (API) in the region.
Strong Technical Capabilities have Propelled AbbVie, Teva, and Mylan at the Leading Position in the Market
The competitive landscape demonstrates a fragmented active pharmaceutical ingredient (API) market. AbbVie Inc., Teva Pharmaceutical Industries Ltd., and Mylan N.V. are the top API companies with a diversified product portfolio, combined with the presence of state-of-the-art technology for the manufacturing of API. Core focus on API production by these companies, along with strategic partnerships with domestic players for securing raw materials, have been instrumental for the dominance of these companies in the API market.
Many contract manufacturing organizations are now solely focusing on developing biological APIs citing the lucrative opportunities in the API market. The market of active pharmaceutical ingredients (API) is further characterized by a large proportion of players in Asia Pacific focusing on developing generic APIs, while manufacturers in Europe and North America are moving towards biological API manufacturing. Other key players include Cipla Inc., Biocon, Amgen Inc., Dr. Reddy’s Laboratories Ltd, Sun Pharmaceutical Industries Ltd., and others.
An Infographic Representation of Active Pharmaceutical Ingredient (API) Market
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The active pharmaceutical ingredient (API) market report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading therapeutic applications of the different types of APIs. Besides this, the report offers insights into the active pharmaceutical ingredient (API) market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market over the recent years.
Value (USD billion)
Fortune Business Insights says that the global market size was USD 164.20 billion in 2018 and is projected to reach USD 261.28 billion by 2026.
In 2018, the market value stood at USD 164.20 billion.
Growing at a CAGR of 6.1%, the market will exhibit steady growth in the forecast period (2019-2026).
The synthetic segment is expected to be leading the market during the forecast period.
Growing demand for biopharmaceuticals, rise in the demand for cost effective drugs, and growing advancements in API production are some of the key factors driving the market.
Teva Pharmaceutical Industries Ltd, AbbVie Inc., Abbott, Aurobindo Pharma, Cipla Inc., Dr. Reddys Laboratories Ltd, and Sun Pharmaceutical Industries Ltd. are some of the leading player in the global market.
North America dominated the market in 2018.
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