Market overview

The Active Pharmaceutical Ingredients Market Size was assessed at USD 277.1 billion in 2021 and is expected to expand from USD 299.21 billion in 2022 to USD 512.13 billion by 2030, with a compound annual growth rate (CAGR) of 7.98% over the forecast period (2022– 2030).

The pharmaceutical ingredients market is witnessing steady growth due to increasing demand for medications across various therapeutic areas. These ingredients are essential components in drug formulation, playing a crucial role in ensuring efficacy and safety. Factors such as technological advancements, rising healthcare expenditure, and growing prevalence of chronic diseases are driving market expansion.

The Active Pharmaceutical Ingredients (API) market is thriving due to the surging demand for pharmaceutical products globally. API, the core component responsible for the therapeutic effects of medications, is witnessing heightened production and innovation. Factors such as the rise in chronic diseases, expanding generics market, and increasing outsourcing are driving pharma ingredients market growth.

In 2020, the COVID-19 pandemic outbreak had a positive impact on the functions performed by the worldwide market, as countries and key players manufactured large amounts of ingredients to meet demand for COVID-19 treatment. The COVID-19 pandemic outbreak has prompted medicine producers to refocus their models on a bigger population of patients.

Market segmentation

Active pharmaceutical ingredients (API) cannot be considered part of any drug that produces its effects. Some drugs, like combination therapies, have multiple active ingredients to treat different symptoms or act in different ways. They are produced using highly technological industrial processes that require high investments during the research and development and the commercial production phase. The active pharmaceutical ingredients (API) market share is segmented into captive API and merchant API based on the business model. Further, it is segmented based on the synthesis type into synthetic and biotech and based on the type of drug into generic and branded. The application segment of the market includes cardiology, pulmonology, oncology, ophthalmology, neurology, orthopedic, and other applications.

Regional analysis

North America currently dominates the active pharmaceutical ingredients market and is expected to continue its stronghold for a few more years. This region is expected to increase its market share due to the increasing incidences of disease and the rising aging population. The US holds the majority of the global market share in the North American region.

With the drastic spread of COVID-19 in the country, followed by the rising fatalities and other issues, the demand for drugs and ingredients increased, forcing the country to export many APIs from different countries, and local players also produced as per the demand. Most of its API requirements are met through imports that are done from the Asian markets. The US trade statistics suggest that nearly 75-80% of the APIs imported to the US are from China and India. These countries are projected to have well-established manufacturing facilities and a large talent pool serving the pharmaceutical sector.

The US government's has announced recent political and trade policies to increase import duties and taxes are expected to drive operational costs and increase the pricing pressure on manufacturers. The FDA has also increased the application fees related to the new drug approvals and has increased the number of periodic inspections conducted on various off-shore contract manufacturing facilities to ensure the supply of high-quality products to the US market.

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