The global Active Pharmaceutical Ingredient (API) market size was valued at USD 134.2 billion in the year 2015 and is estimated to reach a value of USD 239.8 billion by 2025, growing with CAGR of 6.0 %. The market growth can be linked to the rising prevalence of chronic diseases such as cancer, neurological diseases, and cardiovascular diseases.
Increasing demand for rapid-acting & efficient drugs and introduction of innovative drug manufacturing facilities are other key drivers estimated to fuel growth of this market over the forecast period. Major pharmaceutical players opting for API outsourcing from developing regions such as China, India, and Brazil are expected to provide these regions with potential growth platform.
U.S. API market, by type of synthesis, 2014 - 2025 (USD Billion)
In addition, patent expirations are responsible for tremendous loss for pharmaceutical companies in terms of revenue. Patent expirations of the blockbuster drugs give rise to the generic versions of the molecules, and the manufacturers bear the cost. After a patent expires, the R&D investments done by the company are no longer beneficial for the company. Thus, the trend of outsourcing APIs is consistently increasing in the industry.
Synthesis Type Insights
Based on type of synthesis, the market categorized into biotech and synthetic. Various approaches are adopted by the manufacturers depending on the complexity of the required molecule. Synthetic APIs are produced with an organic chemistry base in contrast to biotech APIs, which are manufactured using molecular techniques. Biotech segment is further classified into monoclonal antibodies, recombinant proteins, and vaccines.
Synthetic segment held the largest market share in 2015. However, extensive R&D for new biosimilar drugs, rising demand for protein-based therapeutics, and increasing focus of key traditional manufacturers toward biological drugs are the key factors contributing toward lucrative growth of biotech APIs
Manufacturer Type Insights
Based on the manufacturer type, it is classified into captive or in-house and merchant or outsourced APIs. According to the market estimates, captive APIs was the largest segment in 2015 and the merchant APIs are expected to be the fastest-growing segment over the forecast period.
All pharmaceutical companies are not integrated with a separate unit for formulation of active drug ingredients. This has led to an increase in outsourcing of these molecules from the manufacturing sites. Outsourcing also eliminates the need of investing in expensive manufacturing processes.
Generic and innovative are the types studied in this market. Innovative drug segment includes branded products whereas generic drugs are the ones available over the counter. Owing to high prescription rate, high price, and extensive drug development initiatives, innovative APIs dominated the market in the year 2015.
On the other hand, generics are expected to be the fastest-growing segment type over the forecast period, on account of patent expirations of various blockbuster drugs. Patent expirations of branded drugs have serious impacts on the drug manufacturers, as the companies face tremendous losses post expiration. Hence the manufacturers prefer generic drugs over the branded ones.
Cardiovascular diseases, cancer, CNS & neurological disorders, and endocrinal disorders are the major applications of API. Cardiovascular diseases dominated in 2015 owing to its higher prevalence rate and high amount of product availability. Heart diseases have been reported to be the leading cause of death in the U.S since many years.
On the other hand, oncology is projected to be the fastest-growing segment pertaining to high number of products waiting for market approval. Oncology is estimated to witness CAGR of around 7% over the forecast period.
Global API market, by application, 2015 (USD Billion)
North America dominated the overall API market in 2015 and is expected to hold its position over the forecast period, owing to the increasing R&D expenditure, rising favorable government initiatives for usage of generic drugs and technological advancements in the field of drug manufacturing.
Asia Pacific is expected to be the fastest-growing over the forecast period owing to the availability of affordable labor. Hence, major companies in the industry are setting up the API manufacturing plants in the developing countries such as China and India.
Teva Pharmaceutical Industries Ltd. is one of the leading manufacturers of APIs. Some of the additional players in the industry include AbbVie, Inc., Boehringer Ingelheim GmbH, Cipla, Inc., and Merck & Co., Inc. New molecule launches, acquisitions, collaborations, and regional expansions are some of the strategic initiatives undertaken by these industry players to maintain a stable position.
Base year for estimation
Actual estimates/Historical data
2014 - 2015
2016 - 2025
Revenue in USD Billion & CAGR from 2016 to 2025
North America, Europe, Asia Pacific, Latin America & MEA
U.S., Canada, UK, Germany, Japan, China, India, Brazil, Mexico, South Africa
Revenue forecast, company share, competitive landscape, growth factors and trends
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Segments Covered in the Report
This report forecasts revenue growth and provides an analysis on the industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the API market on the basis of type of synthesis, type of manufacturers, type, application, and region:
CNS & Neurological Disorders
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