Market Overview –

The active pharmaceutical ingredients (API) market is thriving as the demand for effective medications continues to rise. With advancements in pharmaceutical research and development, the need for high-quality active drug ingredients is paramount. From generic drugs to complex formulations, API manufacturers play a crucial role in supplying the backbone of pharmaceutical products, driving market growth and innovation.

The size of the market for active pharmaceutical ingredients was estimated at USD 277.1 billion in 2021 and is expected to increase at a compound annual growth rate (CAGR) of 7.98% from USD 299.21 billion in 2022 to USD 512.13 billion by 2030.

The active pharmaceutical ingredients (API) market involves the production and distribution of the chemical compounds responsible for the therapeutic effects of pharmaceutical drugs. APIs are the biologically active components of medications that exert pharmacological effects on the body. They can be synthesized through chemical processes or extracted from natural sources like plants and animals. APIs serve as the foundation for formulating various pharmaceutical dosage forms such as tablets, capsules, and injections.

With the growing demand for innovative and generic drugs worldwide, the API market is witnessing significant growth. Factors such as increasing prevalence of chronic diseases, expanding pharmaceutical industry, and advancements in manufacturing technologies drive the demand for high-quality and cost-effective active pharmaceutical ingredients.

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 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 market for active pharmaceutical ingredients 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.

Key Players –

Active pharmaceutical ingredients companies include Sanofi SA (France), Hoffmann-La Roche Ltd (Switzerland), Pfizer Inc (US), Abbott (US), Bayer AG (UK), Merck & Co. Inc (US), Boehringer Ingelheim GmbH (UK), GlaxoSmithKline Plc (UK), Novartis AG (UK), Eli Lilly and Company (US), Teva Pharmaceutical Industries Ltd (Israel), among others.

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