Changing Dynamics of Active Pharmaceutical Ingredients (API) Market

Active Pharmaceutical Ingredients is an active substance in drug with biological activity intended for diagnosis, treatment or prevention of disease by altering physiological condition. APIs are synthesized by chemical synthesis, fermentation, biotechnological methods or enhanced from natural source. Globally, there are more than 3,000 firms and over 5,500 manufacturing plants, a large number of them are concentrated in emerging regions due to low cost models and availability of manpower thus the region is leading in export of API products to various parts of the world. The prevailing trend in API industry is off-shoring the production to low-cost regions with simultaneous advances in product development and manufacturing technologies.

Presently, major pharmaceutical companies are focusing in manufacturing both generic and branded drugs due to erosion of product pipeline and patent expirations of prominent drugs which led to increased pricing pressure among low-cost generic manufacturers in developing countries, particularly in Asia Pacific regions such as China and India pertaining to decline in number of API facilities in industrialised countries. China is one of the leading API suppliers with GMP certifications but safety & quality of the product is of major concern, rising competition among existing players, consolidation and development of low-cost APIs with enhanced quality are key trends in Indian market.

Factors such as patent expiration of major drugs, enhanced generic sales, government initiation of biomedical research, increasing scope of HPAPI market, high uptake of biologics across diverse therapeutic areas are driving API market whereas, delay in approval of niche drugs, low investment in API market due to economic downturn and high production costs for manufacturing APIs are hindering API market growth. The average capacity utilization rate for API manufacturing facilities is estimated to be around 50-55% among which biopharmaceuticals commanded highest capacity utilization rate due to increased demand for biologics.

In recent times, global API market is renovating pharmaceutical industry business model where companies are strategically shifting their focus on development and usage of biologically-derived products such as proteins, peptides, enzymes and antibodies as they are effective in targeting specific cells even at low dosages for several therapeutic applications. Oncology is one of the major applications growing rapidly day-by-day and hence, the demand for biologics and also HPAPI drugs are increasing. Some of the biologic drugs approved in 2016 are Venclexta (Venetoclax) for chronic lymphatic leukemia, Defitelio (Defibrodite sodium) for hepatic veno-occlusive disease treatment, Cinqair (Reslizumab) for severe asthma, Taltz (Ixekizumab) for plaque psoriasis, Anthim (Obiltoxamimab) for inhalational anthrax, Briviact (Brivaracetam) for partial onset seizures treatment and Zepatier (Elbasvir & Grazoprevir) for chronic hepatitis C virus treatment. Leuprolide (prostate & breast cancer), Nafarelin (endometriosis treatment), Fentanyl (anesthesia), Alprazolam (anxiety & pain disorders), Risperidone (antipsychotic medication) etc are some of the HPAPI’s.

Some of the top selling API in combination are Emtricitabine, Efavirenz and Tenofovir Disoproxil Fumarate for anti-infectives, Cefoperazone, Sulbactam, Sevelamer hydrochloride, Severalmer carbonate for genitourinary, Metformin, Sitagliptin, Saxagliptin, metoprolol hydrochloride for metabolic disorders, Budesonide, Formoterol for respiratory disorders.

Based on business type, API is classified into captive/in-house and merchant market where presently merchant API market is booming through outsourcing APIs from Contract Manufacturing Organizations (CMOs) or Contract Research Organizations (CROs). Hence, companies such as BASF, Boehringer Ingelheim, Merck, AstraZeneca, and GlaxoSmithKline are preserving their capital by outsourcing APIs at various processing stages in order to formulate final drug compound and in turn accessing new technologies to enhance their productivity and additional capacity.

Prominent players in global API market includes Aurobindo Pharma Ltd (India), Albermarle Corporation (U.S.), Boehringer Ingelheim (U.S.), Dr Reddy’s Laboratories Ltd (India), Fresenius Kabi (Germany), Lonza Group Ltd (Switzerland), Lupin Ltd (India), Novartis AG (Switzerland), Sun Pharmaceuticals Ltd (India) and Teva Active Pharmaceuticals Ltd (Israel).

Some of the emerging API manufacturers are ZCL Chemicals Ltd (India), Lee Pharma Ltd (India), Shenzhen Oriental Pharmaceutical Co Ltd (China), Haorui Enterprises Ltd (China), SMS Pharmaceuticals Ltd (India), Laboratori Alchemia SRL (Italy), Hubei Zhuxi Humanwell Pharmaceutical Co Ltd (China), ChemWerth Inc (U.S.), Symed Labs Ltd (India), Darou Pakhsh Pharma Chem Co (Iran), Megafine Pharma Ltd (India), Shaanxi Hanjiang Pharmaceutical Group Co Ltd (China), Shenzen Salubris Pharmaceuticals Co Ltd (China).


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