Pharmaceutical Chemicals Market Size, Share, and Industry Analysis, By Type (Proprietary and Non-Proprietary), Product (Active Pharmaceutical Ingredients (API) and Pharmaceutical Excipients [Binders, Coatings, Lubricants, and Others]), By Compound (Organic and Inorganic), By Formulation (Oral and Parenteral), By End User (Pharmaceutical & Biotechnological Companies, Contract Manufacturing Organizations, and Others), and Regional Forecast, 2025-2032

The global pharmaceutical chemicals market is witnessing significant growth owing to the increasing research and development activities to develop and introduce innovative drugs. Pharmaceutical chemicals refer to the chemicals used in the production of pharmaceutical products, including medicines, ointments, and vaccines, among others. Along with this, the growing prevalence of chronic conditions among the general population is expected to drive the demand for novel drugs and therapies.

• According to 2023 annual report by Merck & Co., Inc., the company invested USD 30 billion in research and development (R&D) initiatives with an aim to discover, develop, and introduce innovative therapies, and products.

Pharmaceutical Chemicals Market Driver

Increasing R&D Activities to Drive the Market Growth

The increasing research and development activities to launch and develop innovative pharmaceutical products such as vaccines, drugs, among others, are resulting in a growing product demand. In addition, the rising number of product launches for pharmaceutical chemicals are likely to support the growing adoption of these chemicals in the market.

• According to 2021 statistics published by the Organization for Economic Co-operation and Development (OECD), the pharmaceutical industry spent USD 129 billion, with the majority spent in the U.S.

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According to data published by the Organisation for Economic Co-operation and Development (OECD), it was reported that the research and development expenditure was USD 92.2 billion in the U.S., USD 21.2 billion in Europe, USD 12.7 billion in Japan, and USD 2.8 billion in other countries.

Pharmaceutical Chemicals Market Restraint

High Costs Associated with Active Pharmaceutical Ingredients May Hinder Market Growth

There is a growing demand for novel pharmaceutical chemicals, such as active pharmaceutical ingredients and pharmaceutical excipients, for the manufacturing of drugs. However, the rising cost of active pharmaceutical ingredients (APIs) to manufacture these pharmaceutical products is likely to limit their adoption.

• According to 2021 statistics published by the Times of India, it was reported that there is a rise of 140% in the cost of active pharmaceutical ingredients (API), further likely to limit the market growth.

Pharmaceutical Chemicals Market Opportunity

Growing Cases of Rare Diseases to Push the Demand for R&D Activities

The rising cases of rare diseases among the population is an opportunity for pharmaceutical companies to increase the focus toward R&D activities to launch innovative drugs to cater to the growing demand among patients. Rising demand for these drugs is likely to present opportunities for the growth of the global pharmaceutical chemicals market.

• According to 2023 statistics published by the National Center for Biotechnology Information (NCBI), it was reported that the prevalence of alkaptonuria is 1 per 100,000 to 250,000 globally.

Segmentation

Key Insights

The report covers the following key insights:

• Prevalence of Key Disorders, By Key Countries/Regions, 2023
• New Product Launches, By Key Players
• Overview: Technological Advancements in Pharmaceutical Chemicals
• Key Industry Developments (Mergers, Acquisitions, Partnerships)
• Impact of COVID-19 on the Market 

Analysis by Type

By type, the market is segmented into proprietary and non-proprietary.

The proprietary segment holds a major market share in 2023. The growing focus of key players toward R&D activities to launch innovative proprietary drugs is likely to support the segmental growth.

• According to a 2023 article published by ScienceDirect, it was reported that big pharma companies increase their research and development spending by 6% annually. Thus, soaring R&D spending to launch innovative proprietary drugs is likely to support the segmental growth.

Analysis by Product

By product, the market for pharmaceutical chemicals is categorized into active pharmaceutical ingredients (API) and pharmaceutical excipients.  

The active pharmaceutical ingredient (APIs) segment held a prominent market share in 2023. The segmental growth is due to the rising demand for novel APIs, further driving the focus of key players toward inorganic growth strategies, such as the addition of new manufacturing facilities to develop novel APIs in the market.

• In November 2023, Rusan Pharma announced the addition of a new manufacturing facility with an aim to diversify its product portfolio for active pharmaceutical ingredients.

Analysis by Compound

By compound, the market is subdivided into organic and inorganic.

The organic segment accounts for a significant market share in 2023. The segmental growth is due to the rising preference for environmentally suitable products, resulting in the growing demand for novel organic products for the manufacturing of pharmaceutical products such as drugs, vaccines, among others.

• In June 2021, Evonik Healthcare offered “Chemistry in Water” to enable classical organic reactions to be performed in water.

The rising number of organic products supporting the sustainable production of pharmaceutical drugs is likely to contribute to the segment growth.

Analysis by Formulation

By formulation, the market is segmented into oral and parenteral.

The parenteral segment held a dominating share in the market in 2023. The increasing focus of prominent players on research and development activities to launch parenteral excipients, which improve API stability and solubility, is likely to support the segmental growth.

• In October 2023, Clariant launched new parenteral pharmaceutical excipients, such as VitiPure O 80 Superior and VitiPure CO 35 Superior, which improve the stability and solubility of active pharmaceutical ingredients.

Analysis by End User

By end user, the market is categorized into pharmaceutical & biotechnological companies, contract manufacturing organizations, and others.

The pharmaceutical & biotechnological companies segment dominated the market in 2023. The segmental expansion is owing to the growing number of pharmaceutical & biotechnology companies, further supporting the rising number of R&D activities globally. The increasing number of R&D activities is contributing to a surge in the demand for pharmaceutical chemicals, thereby supporting segmental growth.

• According to the 2023 statistics published by Cross River Therapy, it was reported that there are over 5,000 pharmaceutical companies in the U.S. The rising number of pharmaceutical and biotechnological companies is likely to boost the R&D activities, contributing to the segment growth.

Regional Analysis

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By region, the market has been studied across North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

North America accounted for the largest share of the global pharmaceutical chemicals market in 2023. The growth is owing to several factors, including the growing prevalence of acute and chronic disorders, developed healthcare infrastructure, and increasing R&D activities, among others.

• According to 2023 statistics published by Cross River Therapy, the pharmaceutical industry spends over USD 60.0 billion on R&D activities in the U.S.

Additionally, Europe is the second-largest market for pharmaceutical chemicals. The rising geriatric population is resulting in the increasing prevalence of acute and chronic conditions, which is further contributing to the demand for novel drugs and therapies in the market. This, along with the rising focus of key players toward inorganic growth strategies such as acquisitions and mergers, expansions, among others, is further likely to support the regional market growth.

• In October 2023, Sterling Pharma Solutions acquired an active pharmaceutical ingredient facility from Novartis with an aim to strengthen its product portfolio for APIs. This acquisition helped the company boost its R&D activities to launch innovative pharmaceutical drugs in the market.

The Asia Pacific market is expected to grow at a considerable CAGR during the forecast period. The growth is due to the rising number of key players operating in the market offering novel active pharmaceutical ingredients and pharmaceutical excipients.

Key Players Covered

The global market is fragmented and has several players.

The report includes the profiles of the following key players:

• BASF Corporation (Germany)
• Porton Pharma (China)
• Lonza (Switzerland)
• Johnson Matthey (U.K.)
• Sterling Pharma Solutions Limited (U.K.)
• CLARIANT (Switzerland)
• Denisco Chemicals Pvt Ltd. (India)
• EVONIK (Germany)

Key Industry Developments

• In May 2024, the U.S. Agency for International Development (USAID) launched a new project, Diversifying Asia’s Pharmaceutical Supply Chain, with an aim to provide USD 5.0 million for the sustainable production, regulation, and exportation of quality-assured medical products and active pharmaceutical ingredients in Uzbekistan and Kazakhstan.
• In March 2022, Lubrizol Life Science (LLS) Health, a player dedicated to pharmaceutical development, launched Apisolex, a novel solubility-enhancing excipient with an aim to improve the solubility and stability of active pharmaceutical ingredients. The growing number of pharmaceutical excipients are likely to improve the quality of APIs.