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The Active Pharmaceutical Ingredients (API) Market size is estimated to grow by USD 86.47 billion at a CAGR of 6.73% between 2023 and 2028. The market's growth is influenced by several factors, including the evolving API manufacturing landscape in developing regions, the increasing number of Type II Drug Master Files (DMFs), and the growing need for companies to focus on core competencies. These elements collectively drive market expansion, reflecting shifts in production strategies and regulatory environments. The evolving API manufacturing scenario in developing regions highlights the expansion and modernization of production facilities. Simultaneously, the rise in Type II DMFs indicates a surge in regulatory filings, showcasing increased drug development activities. Additionally, the growing need to focus on core competencies emphasizes the trend of outsourcing non-core activities to enhance efficiency and innovation. Thus, the interplay of these factors shapes the landscape for the anticipated growth of the API manufacturing market.
The market is currently witnessing an upward trend of intent to outsource APIs by leading players in the pharmaceutical industry. For emerging biopharmaceutical and virtual pharmaceutical companies, a vast majority of the API and intermediate manufacturing is done by outsourcing providers. This trend is also observed in generic drug manufacturing, where orchestration is done by the generic drug manufacturer to have the API manufacturing outsourced by a large portion. In addition, active pharmaceutical ingredient manufacturers are known to obtain a cost advantage through economies of scale and the availability of low-cost labour and land. Various large pharmaceutical companies, such as Pfizer, have been sourcing a large share of their manufacturing activities of bulk actives used for the preparation of finished drugs, primarily generic drugs, to focus on the expansion of their pipelines for various major indications. The growing need for pharmaceutical companies to focus on their core competencies is expected to contribute to the growth of the market during the forecast period.
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The market is a dynamic arena driven by constant innovation and research. Companies like Novasep, headquartered in Chasse-sur-Rhône, are at the forefront of active pharmaceutical ingredients formulation, focusing on diverse therapeutic areas ranging from schizophrenia to infectious diseases and genetic disorders. With a rising prevalence of chronic conditions like cardiovascular diseases and diabetes, as highlighted by the International Diabetes Federation (IDF), the demand for both small molecule and large molecule APIs is increasing. Ensuring the authenticity of medications is crucial in combating the threat of counterfeit drugs. In this landscape, research and investment in innovative API, including synthetic and biotech variants, are key. Manufacturers, whether captive or merchant, play pivotal roles in supplying essential APIs like acetaminophen and artemisinin, driving advancements in oncology drug research and treatment.
The market share growth by the captive APIs segment will be significant during the forecast period. In 2023, the captive API manufacturing segment accounted for the largest share of the market. The increased adoption of healthcare services has benefited the global active pharmaceutical ingredients market significantly.
The captive APIs segment was the largest and was valued at USD 95.44 billion in 2018. Furthermore, the increasing emphasis of healthcare regulatory authorities on quality control of APIs and their production facilities is a growing concern for manufacturers, resulting in increased dependency on in-house capabilities for the manufacturing of high-quality APIs. Drug manufacturers are advised to strictly adhere to the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) guidelines and the US Non-adherence to these guidelines can lead to batch recalls, thus exposing drug manufacturers to an increased financial burden. To overcome these barriers, innovators rely on their in-house capabilities for manufacturing APIs, which is the major factor driving the growth of this segment. Thus, major companies such as Pfizer, Novartis, Sanofi, and GlaxoSmithKline Plc are investing in in-house API capabilities, which will drive the growth of the segment and thereby expand the growth of the market during the forecast period.
Asia is estimated to contribute 52% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that will shape the market during the forecast period. Asia accounted for the largest share of the market in 2022. Indian companies have become very proficient at the manufacturing of pharmaceutical products in compliance with the good manufacturing practice (GMP) standards, meeting the regulatory needs of the US- and Europe-based generic drug companies and commercializing their bulk products at a large scale. Several Indian manufacturers, including Lupin Ltd. (Lupin) and Sun Pharmaceutical Industries Ltd. (Sun Pharma), are successfully competing in the US generic drug market.
Furthermore, the presence of key companies in the region, such as Cipla, Sun Pharmaceutical Industries Ltd., Aurobindo Pharma Ltd., and Dr Reddys Laboratories Ltd., coupled with government efforts to boost the API production in the country, will drive the growth of the active pharmaceutical ingredients market in the region during the forecast period.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market. The report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
AbbVie Inc. - The company offers active pharmaceutical ingredients such as organometallic and gaseous HCl.
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is driven by a myriad of factors, including the increasing prevalence of chronic disorders such as diabetes, cardiovascular diseases, and cancer. Technological advancements in drug formulation, led by companies like Novasep and MEDinCell, are shaping trends in API development, with a focus on innovative small and large molecule therapies. However, challenges such as counterfeit drugs and regulatory hurdles persist, necessitating rigorous research and investment. Additionally, the rise of biotech APIs presents both opportunities and complexities for the industry, as seen in the production of Artemisinin for infectious diseases. There are multiple factors influencing market growth. Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges.
The increasing number of type II drug master files (DMF) is notably driving the market growth. Apart from the increased healthcare expenditure by the urban population across the world and a rapid surge in the aged population, the market stands to gain additional traction from the increase in the number of DMFs filing for APIs. A DMF is submitted to the US FDA, which provides detailed information about the facilities, processes, and materials used in the manufacturing, processing, and packaging of drugs intended for human use. The information contained in a DMF may be used to support an investigational new drug (IND) application, a new drug application (NDA), an abbreviated new drug application (ANDA), another DMF, an export application, or related documents. There are five types of DMFs that can be granted, each requiring a different type of information.
Moreover, the active pharmaceutical ingredient market is rapidly emerging as pharmaceutical manufacturers are increasingly relying on API manufacturers for outsourcing bulk actives for manufacturing generic drugs and high-end, difficult-to-manufacture patented drugs. Globally, API manufacturers have been leveraging the increased outsourcing demand for APIs or intermediates, which is reflected through the aggressive DMF filings made by these manufacturers. This increasing number of type II drug master files is expected to drive the growth of the market during the forecast period.
The increasing geriatric population is an emerging trend shaping the market growth. The market is expected to benefit from the increasing geriatric population. The risk of acquiring or developing Chronic diseases in people increases with their age, which, in turn, propels the demand for various therapeutics for their treatment, consequently leading to an increase in demand. Comorbid conditions among geriatric people (aged 65 years and above), along with sleep, cognition, strength, and physical balance, are the factors that negatively impact a person's ability to function properly and make disease management more difficult. Moreover, the CDC estimates that the total healthcare spending in the US will increase by 25% by 2030, largely due to the increasing geriatric population.
However, to reduce the impact of economic burden, national healthcare regulatory bodies promote the use of generic drugs for the treatment of geriatric patients, resulting in increased approval of generics. This, in turn, leads to increased penetration of generic drug manufacturers in the US and Europe. These generic drug manufacturers outsource raw materials from API manufacturers to provide cost-effective therapeutics, which contributes to the growth of the market during the forecast period.
Capacity utilization constraints are a significant challenge hindering the market growth. Currently, the market is facing a major threat from constraints related to capacity utilization. Capacity utilization is a measure of actual production compared with the potential production of a company when the capacity is completely utilized. It has a major role in the production of active pharmaceutical ingredients, and biosimilars particularly for manufacturing biologics, due to the complex manufacturing process. API capacity is strategic in terms of vertical integration and supply to regulated markets. Drug manufacturers are expected to make additional investments in capacity creation and capacity building. Most companies face a challenge with developing advanced downstream purification technologies, which are used for the recovery and purification of biosynthetic products.
Moreover, the limited number of approved manufacturing facilities is also causing a capacity constraint. The lack of new and experienced scientists, technical staff, and production staff; the shortage of cost-effective single-use products; and limitations in advanced cell culture systems for upstream performance are also causing constraints in the market, which is expected to hinder the growth of the market during the forecast period.
The market research report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.
Customer Landscape
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments
India Active Pharmaceutical Ingredient (API) Market: India Active Pharmaceutical Ingredient (API) Market by Manufacturing Type, Type, and Product Type - Forecast and Analysis
US Active Pharmaceutical Ingredient (API) Market: US Active Pharmaceutical Ingredient (API) Market by Type, Product and Application - Forecast and Analysis
Ibuprofen Active Pharmaceutical Ingredient (API) Market: Ibuprofen Active Pharmaceutical Ingredient (API) Market Analysis Asia,North America,Europe,Rest of World (ROW) - US,Germany,UK,India,China - Size and Forecast
The market is influenced by a multitude of factors, including the presence of both innovative and generic APIs. Companies like CuraTeQ Biologics, Mendus AB, and GenScript ProBio are among the key players driving advancements in biotech APIs. NovasepPharmaZell Group and Minaris Regenerative Medicine GmbH contribute with their expertise in synthetic APIs, meeting demand across various therapeutic areas such as cardiology, CNS & neurology, and orthopedic. However, challenges like lack of demand for certain APIs persist. Both captive and merchant API manufacturers like GeneCraft play crucial roles in supplying essential ingredients like saxagliptin, sodium chloride, and ibuprofen for prescription drugs, ensuring a steady supply chain for clinical applications spanning cardiology to ophthalmology. In this complex landscape, collaboration and innovation are essential for meeting the diverse needs of the pharmaceutical industry.
Moreover, excipients play a crucial role in pharmaceutical formulations, enhancing the stability, bioavailability, and overall performance of active pharmaceutical ingredients (APIs). Companies like Eurofins are at the forefront of ensuring the quality and safety of these excipients through rigorous testing and analysis. In the realm of APIs, there's a distinction between captive API manufacturers, who produce ingredients for their own products, and merchant API manufacturers, who supply APIs to other pharmaceutical companies. From innovative APIs to generics like Losartan Potassium and Enoxaparin Sodium, these ingredients serve various therapeutic areas including endocrinology, pulmonology, gastroenterology, nephrology, and beyond, catering to diverse therapeutic applications in the pharmaceutical industry. Merchant API manufacturer and captive API manufacturer produce innovative and generic active pharmaceutical ingredients, including synthetic and biotech APIs, for various therapeutic applications such as rufinamide, naproxen, and tamoxifen, among others.
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Market Scope |
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Report Coverage |
Details |
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Page number |
164 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 6.73% |
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Market Growth 2024-2028 |
USD 86.47 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
6.24 |
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Regional analysis |
Asia, North America, Europe, and Rest of World (ROW) |
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Performing market contribution |
Asia at 52% |
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Key countries |
US, Germany, China, India, and Japan |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
AbbVie Inc., Amneal Pharmaceuticals Inc., Apotex Inc., Aurobindo Pharma Ltd., Cadila Pharmaceuticals Ltd., Cambrex Corp., Cipla Ltd., Dr Reddys Laboratories Ltd., GlaxoSmithKline Plc, Indena S.p.A., INTERNATIONAL CHEMICAL INVESTORS S.E., Koninklijke DSM NV, Lupin Ltd., Novartis AG, Pfizer Inc., Sanofi SA, Sun Pharmaceutical Industries Ltd., Teva Pharmaceutical Industries Ltd., Thermo Fisher Scientific Inc., and Viatris Inc. |
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Market dynamics |
Parent market growth analysis, Market Forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the market forecast period. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Manufacturing Type
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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