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 Type Of Drug, By Region, And Segment Forecasts, 2024 - 2030

Market Size & Trends

The global active pharmaceutical ingredients market size was estimated at USD 237.47 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 5.75% from 2024 to 2030. Advancements in active pharmaceutical ingredient (API) manufacturing, growth of the biopharmaceutical sector, and an increase in geriatric population are among the key drivers of API market. An increase in prevalence of chronic diseases, such as cardiovascular diseases and cancer, is anticipated to boost market growth.

According to the UN, in 2022, people aged 65 and above accounted for 771 million of the global population, and the number is anticipated to reach 994 million by 2030, and 1.6 billion by 2050. The number of elderly people is showing the fastest growth in Africa, with a threefold increase estimated in people aged 60 and above, followed by Latin America, reaching 18.8 billion by 2050. Aging is considered the greatest risk factor for development of diseases, including cardiovascular and neurological diseases. Thus, rapidly growing global geriatric population is resulting in a high-impact-rendering driver for API market.

Increasing prevalence of infectious diseases and hospital-acquired infections is driving market growth. In addition, growing incidence of cardiovascular, genetic, and neurologic disorders is anticipated to act as a high-impact-rendering driver for market growth. Cardiovascular Diseases (CVDs) are the most prevalent causes of death globally. According to the WHO, cardiovascular diseases cause death of 17.9 million people per day and are expected to cause approximately 25 million deaths by 2030.

Increasing epidemiology of lifestyle, aided by rising number of smokers globally, growing incidence of obesity, and increasing dietary irregularities, are factors responsible to propel market growth. A recent report by the United Nations (UN) in May 2023 suggests that there has been a 75% increase in the number of girls and 61% in the number of boys with obesity in Europe.

Outsourcing of APIs has become profitable over in-house production. However, this trend took a different turn during COVID-19. Companies are looking to diversify their API suppliers and manufacturers to different locations instead of outsourcing it to just one manufacturer. Risk mitigation is done using dual sourcing to ensure a continuous supply. Hence, key companies aim to capitalize on this ongoing outsourcing trend with new acquisitions. In August 2023, EUROAPI announced its deal to acquire BianoGMP to enhance its CDMO expertise in oligonucleotide manufacturing, which is a high-growth industry. This further demonstrates the company’s plans for vertical integration.

Type of Drug Insights

The prescription segment dominated the overall API market with a revenue share of 79.26% in 2023. The uptake of prescription drugs is largely dependent on physicians’ prescriptions. Use of prescription drugs, such as Proton Pump Inhibitors (PPI), in the management of general conditions, heartburn, has plateaued owing to several adverse effects.

However, Histamine-2 Receptor Antagonist (H2RA) prescription rate has been impacted. Prescription drugs dominated in oncology segment as cancer is primarily treated using chemotherapy, targeted therapy, immunotherapy, and hormonal therapy. The use of biology is also increasing.Due to the increased efficacy of novel targeted therapies, the number of prescriptions for targeted therapies is rapidly increasing. Furthermore, major players are launching novel targeted therapies.

OTC segment is expected to show the fastest growth over the forecast period. OTC products are easily accessible to the population and are frequently impacted by changes in consumer behavior. Consumer preference is shifting from use of antacids for heartburn to ensuring gut health by taking probiotics. This paradigm shift is creating greater opportunities for preventive products, such as health supplements, nutraceuticals, and probiotics, while slashing the growth of existing products.

Regional Insights

North America led the market with a share of 38.26% in 2023 owing to rising prevalence of cardiovascular, genetic, and other chronic diseases aided with growing research in field of drug development. Presence of key players such as AbbVie Inc.; Curia; Pfizer Inc. (Pfizer Center One); Viatris Inc.; and Fresenius Kabi AG is positively influencing growth. For instance, in February 2022, Viatris received FDA approval for Generic Restasis—a cyclosporine ophthalmic emulsion for treating dry eye disease.

The region shows high-value manufacturing areas, including complex & high potent APIs, gene therapies & biologicals, which are expected to provide relative growth. Moreover, there is significant expansion of innovators and CDMOs seen in the region, which is creating an expanded advantage for manufacturing and commercializing APIs.

Asia Pacific is expected to register the fastest growth over the forecast years. Market is experiencing sharp growth as majority of API production occurs in countries present in the region with high API export rate.China is the largest producer of APIs, manufacturing over 1,600 varieties of chemical APIs. Moreover, several key global players are establishing their operations in the region.

Rising investment and initiatives to support and expand manufacturing facilities are further driving growth of overall API market. For instance, in November 2022, Aurobindo Pharma is expected to complete Penicillin G plant approved under the PLI scheme by 2024, with investment of USD 2,000 million to ensure and promote domestic manufacturing of API by increasing the production capacity to 15,000 tons annually.

Market Dynamics

Personalized medicines involve customizing treatments for individual patients based on their genetic makeup. This approach requires APIs that are used to develop tailored treatments, such as targeted therapies & biologics, built to treat specific conditions or diseases in specific patient populations. Precision medicine has significantly impacted the API industry, fueling demand for specialized APIs and novel approaches for drug testing & development.

For example, cancer treatments targeting particular genetic mutations are under development, and therapies for rare genetic disorders are being developed, targeting specific gene defects. Hence, this increased the demand for specialized APIs, which can be manufactured and processed at a wider scale. API market is becoming more competitive and consumer needs are becoming highly focused toward efficacy & specificity of therapeutic agent raw material. Buyers tend to purchase materials matching their requirements and negotiate prices.

Thus, buyers are highly involved in purchasing process to ensure quality of material matches their requirements. Key market players adopting this inorganic growth strategy include Novo Nordisk; Merck KGaA; Novartis AG; Aurobindo Pharma; and Piramal Pharma. For instance, in September 2023, Isotopia Molecular Imaging announced start of its operation in the U.S. by moving its first manufacturing plant to Indiana for producing GMP-grade Lu-177 n.c.a., used in cancer-targeted treatment.

However, a major factor restraining market growth is stringent regulatory process for approval of APIs. Regulatory bodies including FDA in the U.S., EMEA in Europe, National Agency of Medicine & Health Product Safety (ANSM) in France, and Pharmaceuticals and Medical Devices Agency (PMDA) in Japan provide cGMP protocols and monitor safety regulations at API production facilities.

Type of Synthesis Insights

The synthetic segment held the largest revenue share of 70.66% in 2023. Major driver for synthetic API market is high demand for generic drugs. APIs used to develop generic drugs contribute to high revenue for synthetic and chemical API manufacturing companies. This is creating a wide opportunity for CDMOs working in this segment. Opportunity in the synthetic API market becomes even more lucrative for CDMOs owing to an increase in outsourcing trend, as companies want to improve profitability by reducing the cost of production. In October 2023, Cambrex announced completion of its USD 38 million small molecule API manufacturing facility. This investment doubled the size of the company’s manufacturing facility and enhanced its ability to acquire more customers to meet their evolving needs.

Biotech API segment is expected to show fastest growth during the forecast period. Growth of biotech API segment can be attributed to rising investments in biopharmaceutical and biotechnology sectors. This allows innovation of new molecules that aid in treating diseases such as cancer. Key players are highly focused on biotech APIs owing to high revenue generation and profitability associated with them.For instance, in May 2023, OLON Group announced its entry into the ADC API business with its facility located in Italy. The company invested €22 million (USD 23.13 million) for the production with a containment level of OEB6.

Type of Manufacturer Insights

Captive APIs segment held the largest market share of 51.03% in 2023. More companies are investing in solving challenges and developing new chemical ways for in-house production of APIs. This aids in reducing costs and risk of contamination. Protein synthesis and artificial intelligence are expected to accelerate development with greater control over the process.Furthermore, recent initiatives and developments by key players indicate a strong preference for in-house manufacturing over outsourcing.

For instance, in September 2021, AstraZeneca announced an investment of USD 360 million in its API manufacturing facility in Ireland to commercialize novel products. Such initiatives undertaken by key players are anticipated to boost segment growth. Merchant APIs segment is anticipated to grow at the fastest growth rate over the forecast period.Contract manufacturing and outsourcing of API molecule development are growing trends in pharmaceutical sector.

As captive production of APIs is expensive, companies have started opting for outsourcing to minimize expenses. Merchant APIs eliminate the need for investing in expensive equipment and sophisticated infrastructure. Post-pandemic, key companies are expanding their capacities to enhance their market presence. For instance, in May 2023, MilliporeSigma announced the expansion of its U.S.-based facility, with an investment of USD 69 million, doubling its manufacturing capacity for Highly Potent Active Pharmaceutical Ingredient (HPAPI). The facility is dedicated to the development and commercial manufacturing of Antibody Drug Conjugates (ADCs).

Type Insights

Innovative APIs dominated the market with a revenue share of around 62.0% in 2023. The market growth is attributed to increase in funding and favorable regulations for R&D facilities. Many novel innovative products are now in pipeline due to extensive research in this field and are expected to be launched in near future. Furthermore, increasing support from regulatory agencies for approval of new drugs is projected to facilitate market growth, which can be attributed to an increase in focus of government on healthcare and pharmaceuticals due to COVID-19.

Generic APIs are anticipated to show the fastest growth rate over the forecast period. Expiry of patents of various branded molecules is a key factor that offers high opportunity for growth of generic API drugs.Post-pandemic, pharmaceutical industry is nearing a patent cliff by 2030, with nearly 200 molecules losing exclusivity and over 100 biosimilars developing as of 2023. This creates an opportunity for generic API manufacturers as the demand for the API of these products is set to rise by the end of this decade. This includes over 60 molecules that belong to the oncology segment with complex high-revenue generating API’s.

Application Insights

The cardiology segment dominated the market with a revenue share of 21.34% in 2023. According to a WHO Report of 2023, over half a billion people worldwide are affected by CVDs, causing approximately 20.5 million deaths in 2021 - almost a third of global deaths and an increase from the previously estimated 121 million CVD-related deaths. Cardiovascular disease is one of the most serious public health problems, prompting extensive research into APIs in the field. Simvastatin is a cholesterol-lowering drug belonging to statin class and used in treatment of dyslipidemia. Rosuvastatin calcium is an additional API used for cardiovascular diseases by AstraZeneca.

Oncology segment is anticipated to grow at the fastest rate over the forecast period. Increasing global prevalence of cancer is a key factor driving this market. Collaboration among pharmaceutical companies, research institutions, and regulatory entities remains pivotal in expediting drug development, ensuring patient safety, & fostering innovation. In March 2023, Pfizer Inc. and Seagen Inc. confirmed a definitive merger agreement. Through this strategic deal, Pfizer will acquire Seagen, a renowned biotech firm specializing in revolutionary cancer treatments. The agreement includes a cash transaction of USD 229 per Seagen share, resulting in an enterprise value of USD 43 billion.

Key Companies & Market Share Insights

Presence of pipeline products in the API market is expected to launch in the coming years and is anticipated to drive market growth. A blockbuster drug 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 during the forecast period.

• In April 2023, Eli Lilly announced an investment of USD 1.6 billion in U.S.-based LEAP Innovation Park. This brings the total investment to USD 3.7 billion to manufacture complex APIs for products such as genetic medicine.

• In January 2023, Sterling Pharma Solutions acquired an API manufacturing facility from Novartis in Ringaskiddy, Ireland.

Active Pharmaceutical Ingredients Market Report Scope

Global Active Pharmaceutical Ingredients Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global active pharmaceutical ingredients market report based on type of synthesis, type of manufacturer, type, application, type of drug, and region:

• Type of Synthesis Outlook (Revenue, USD Billion, 2018 - 2030)

  • Biotech

    • Biotech APIs Market, By Type (Revenue, USD Billion, 2018 - 2030)

      • Generic APIs

      • Innovative APIs

    • Biotech APIs Market, By Product (Revenue, USD Billion, 2018 - 2030)

      • Monoclonal Antibodies

      • Hormones

      • Cytokines

      • Recombinant Proteins

      • Therapeutic Enzymes

      • Vaccines

      • Blood Factors

  • Synthetic

    • Synthetic APIs Market, By Type (Revenue, USD Billion, 2018 - 2030)

      • Generic APIs

      • Innovative APIs

• Type of Manufacturer Outlook (Revenue, USD Billion, 2018 - 2030)

  • Captive APIs

  • Merchant APIs

• Type Outlook (Revenue, USD Billion, 2018 - 2030)

  • Generic APIs

  • Innovative APIs

• Application Outlook (Revenue, USD Billion, 2018 - 2030)

  • Cardiovascular Diseases

  • Oncology

  • CNS and Neurology

  • Orthopedic

  • Endocrinology

  • Pulmonology

  • Gastroenterology

  • Nephrology

  • Ophthalmology

  • Others

• Type of Drug Outlook (Revenue, USD Billion, 2018 - 2030)

  • Prescription

  • OTC

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • UK

    • France

    • Italy

    • Spain

    • Denmark

    • Sweden

    • Norway

  • Asia Pacific

    • Japan

    • China

    • India

    • Australia

    • South Korea

    • Thailand

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East and Africa (MEA)

    • South Africa

    • Saudi Arabia

    • UAE

    • Kuwait