Active Pharmaceutical Ingredients Market Size, Share & Trends Analysis Report By Type Of Synthesis (Biotech, Synthetic), By Type Of Manufacturer (Captive, Merchant), By Type, By Application, By Region, And Segment Forecasts, 2021 - 2028

Report Overview

The global active pharmaceutical ingredients market size was valued at USD 187.76 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 6.6% from 2021 to 2028. The growth can be attributed to the advancements in active pharmaceutical ingredient (API) manufacturing and the rising prevalence of chronic diseases, such as cardiovascular diseases and cancer. Favorable government policies for API production, along with changes in geopolitical situations, are boosting the market growth. The API market is undergoing immense changes due to supply chain disruption by COVID-19. Countries such as India are being preferred over China for the export of API owing to geopolitical situations and the demand to reduce dependence on China for API products. Furthermore, governments of many countries have formulated plans and granted incentives to promote the production of API.

The global geriatric population is rising. According to the UN, in 2017, the population aged 65 and above is anticipated to increase from 962 million in 2017 to 2.1 billion by 2050. Aging weakens the immune system and increases a patient’s susceptibility to acquiring infectious diseases. Moreover, impairment in body functions enhances the chances of getting other diseases, such as CVD and diabetes.

The requirement of high capital for the production of APIs is because the process needs extremely systematic protocols, which results in the outsourcing of various APIs. In addition, pharmaceutical companies benefit from API production outsourcing as it eradicates the need for expensive manufacturing unit installation and labor force. Thus, the need for cost savings boosts outsourcing. Strategic outsourcing by companies allows them to focus on core competencies, which results in increased productivity.

In addition, APIs are used as Antibody Drug Conjugates (ADCs). ADCs are important and effective treatment modalities used in combination with biologically active drugs and monoclonal antibodies for cancer. APIs effectively target cancer cells, while causing minimum exposure of drugs to healthy tissues. Thus, the development of cancer-specific APIs is expected to boost the API market growth.

Type of Manufacturer Insights

The captive API segment accounted for the largest revenue share of 59.87% in 2020. It is anticipated to grow at a significant rate in the upcoming years owing to the easy availability of raw materials and extensive investments by major players to develop high-end manufacturing facilities.

Furthermore, recent developments and initiatives by key players suggest that they are highly focused on in-house manufacturing over outsourcing. For instance, in November 2019, Novartis announced the acquisition of CellforCure—a France-based CDMO—for producing molecules in-house, which was earlier contracted to CellforCure. These initiatives undertaken by key players are anticipated to boost segment growth.

Major companies are looking to leverage their production capabilities in Asian countries in an attempt to provide APIs to other drugmakers. For instance, in November 2017, Eisai Pharmaceuticals invested over USD 9.32 million to install manufacturing equipment for API production in India. The company is expected to offer its services to other drug manufacturers by 2020.

Top biopharmaceutical players are responsible for substantial growth in the outsourcing segment. Furthermore, the lower cost of manufacturing in countries, such as India and China, makes them a popular choice for players looking to outsource their API production. Outsourcing of manufacturing to developing countries is a cost-effective measure that allows these companies to gain higher profits, thus accelerating segment growth.

Type Insights

Innovative APIs held the largest share of 65.03% in 2020. This growth is attributed to increasing R&D initiatives for novel drug development and favorable government regulations. Owing to extensive research in this field, many innovative products are now in pipeline and are expected to be launched over the forecast period. New entrants in this segment are expected to drive the market.

A rise in demand for targeted therapies with high potency API compounds, such as HPAPI, is anticipated to further create significant demand for personalized medicines. For instance, ADCs leverage the specificity of antibodies for cancer cells. These cells use linker technology to attach themselves to the antibody. These advanced features of ADCs are anticipated to drive the market, with most pharmaceutical companies pursuing such development programs.

Patent expiry of branded molecules is a key factor that can be attributed to the lucrative growth of generic API drugs. The generic drug market is anticipated to exhibit a high growth rate in countries, such as Brazil and India, owing to high unmet clinical needs and acceptance of OTC drugs.

Application Insights

The cardiovascular diseases segment accounted for the largest revenue share of 21.3% in 2020. This is attributed to the increasing prevalence of target diseases worldwide. Various organizations such as the World Heart Federation, the World Stroke Organization, and the Stroke Association are working toward increasing awareness about cardiovascular diseases. Government initiatives such as the National Cholesterol Education Program are aimed at improving awareness related to lipid and cholesterol-related diseases. High prevalence and increasing awareness about cardiovascular diseases are anticipated to drive the segment over the forecast period, thus driving demand for APIs for cardiology drugs.

Oncology is expected to be the fastest-growing application segment with a CAGR of 8.9% over the forecast period. Factors such as changing lifestyles and the growing prevalence of cancer are driving the market.

The increasing adoption of a sedentary lifestyle is driving the prevalence of various metabolic disorders. Hormonal imbalance is a growing concern in most countries. These disorders include thyroid and sex hormone imbalance. Levothyroxine is a popular API used to treat hypothyroidism. Hormonal therapy is of various types: for postmenopausal women, for men on cancer treatment, and for children to enable proper growth. A rise in hormone-dependent aging problems is also expected to drive the market.

Other diseases such as diabetic retinopathy and macular degeneration are also growing in prevalence, impelling the demand for highly efficient and cost-effective medications. Diabetic retinopathy is expected to impact over 190 million people by 2030. This is expected to boost demand for both generic medications and APIs.

Type of Synthesis Insights

The synthetic API segment accounted for the largest revenue share of 72.89% in 2020. This is attributed to the higher availability of raw materials and easier protocols for the synthesis of these molecules. Many synthetic molecules are also expected to go off-patent in the coming years, which is anticipated to boost growth.

The biotech segment is expected to expand at the fastest CAGR of 7.8% over the forecast period. This segment is driven by factors such as increasing demand for biopharmaceuticals and higher efficiency of these molecules. Furthermore, the growth of the biotech segment can be attributed to high investments in the biotechnology and biopharmaceutical sectors. This allows the innovation of new molecules that aid in the treatment of diseases, such as cancer. The high revenue of biotech-related API makes the market highly profitable, attracting major players. For instance, Proleukin (aldesleukin) by Clinigen, Inc. is a biologic therapy for metastatic renal cell carcinoma.

Recombinant proteins are extensively used in gene sequencing, especially to create antibody probes within cells. Thus, recombinant proteins find extensive applications in targeted therapies. These proteins play a crucial role in the development of novel treatments, such as cell therapy. Players are investing in protein manufacturing plants, for instance, in November 2019, Bio-Techne announced an investment of over USD 40 million to upgrade its protein manufacturing facility and meet cell therapy demands. However, there are a limited number of players in the field, leading to insufficient supply for current and future demands.

Regional Insights

North America accounted for the largest revenue share of 39.5% in 2020 and is expected to maintain its lead over the forecast period. This is attributed to the rising epidemiology of cancer, along with other lifestyle-induced diseases, thus encouraging the R&D activities, thereby boosting the market growth.

Asia Pacific is anticipated to exhibit the fastest CAGR of 7.8% during the forecast period. The presence of economies such as China and India that the world relies on for the production of APIs at a lower cost is an advantage for the region. Increasing healthcare expenditure in the region is anticipated to fuel the market growth.

Europe is expected to witness significant growth over the forecast period. An increase in research funding and the local presence of key market players in this region is expected to drive the market. The number of biopharmaceutical companies is growing in Europe owing to increasing investments. For instance, in 2017, USD 20 billion was raised as an investment by the biopharma industry, which increased by 28% to USD 27.5 billion in 2019. A number of key global players conduct their biopharmaceutical R&D in Europe.

Key Companies & Market Share Insights

The market for active pharmaceutical ingredients operates with high complexity. Blockbuster drugs patent expiration, increasing outsourcing activities due to high manufacturing costs, and stringent regulations on the production of APIs are expected to maintain the competitive rivalry at a high level over the forecast period.

Many key players are undergoing legal scrutiny because of non-adherence to standards. For instance, in August 2019, the U.S. FDA issued 75 warning letters to API production facilities, out of which, half were for Indian and Chinese firms. Such stringent regulations are anticipated to act as a restraining factor for market growth. Moreover, legal issues are slowing down the establishment of new API facilities. For instance, in 2020, Dr. Reddy's Laboratories and Eli Lilly and Company faced problems with the U.S. FDA for their API plants.

The presence of prominent players in this market space significantly diminishes the opportunities for a new entry into the market as it is difficult to match the high capital requirements. Some prominent players in the global active pharmaceutical ingredients market include:

• Merck & Co., Inc.

• AbbVie, Inc.

• Bristol-Myers Squibb Company

• Boehringer Ingelheim International GmbH

• Cipla, Inc.

• Teva Pharmaceutical Industries Ltd.

• Albemarle Corporation

• Viatris Inc.

• Aurobindo Pharma

• Sun Pharmaceutical Industries Ltd.

• Dr. Reddy’s Laboratories Ltd.

Active Pharmaceutical Ingredients Market Report Scope 

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2017 to 2028. For the purpose of this study, Grand View Research has segmented the global active pharmaceutical ingredients market report on the basis of the type of synthesis, type of manufacturer, type, application, and region:

• Type of Synthesis Outlook (Revenue, USD Billion, 2017 - 2028)

  • Biotech

  • Monoclonal Antibodies

  • Recombinant Proteins

  • Vaccines

  • Synthetic

• Type of Manufacturer Outlook (Revenue, USD Billion, 2017 - 2028)

  • Captive APIs

  • Merchant APIs

• Type Outlook (Revenue, USD Billion, 2017 - 2028)

  • Generic APIs

  • Innovative APIs

• Application Outlook (Revenue, USD Billion, 2017 - 2028)

  • Cardiovascular Diseases

  • Oncology

  • CNS and Neurology

  • Orthopedic

  • Endocrinology

  • Pulmonology

  • Gastroenterology

  • Nephrology

  • Ophthalmology

  • Others

• Regional Outlook (Revenue, USD Billion, 2017 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

    • Russia

  • Asia Pacific

    • Japan

    • China

    • India

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa

    • South Africa

    • UAE

    • Saudi Arabia