Active pharmaceutical ingredient (API) Global Market estimated to be worth $364.2 billion by 2027
Active pharmaceutical ingredient (API) is any substance or combination of substances used in a finished pharmaceutical product (FPP), with pharmacological activity and has direct effect in the cure, mitigation, treatment of the disease, or has direct effect in restoring, correcting, or modifying physiological functions in human beings. API manufacturing involves the conversion of key starting materials or raw materials like fine chemicals and intermediates into active ingredients, which will be used for the formulation of drug products.
Active pharmaceutical ingredients global market is expected to reach $364,169.4 million by 2027 growing at a high single digit CAGR from 2020 to 2027. Adoption of biologics in disease management and increasing regulatory approvals in the last few years, increasing scope of HPAPI market, patent expiration of major drugs, increasing trend of outsourcing, increase in the prevalence of chronic diseases, and increase in geriatric population are some of the factors driving the market growth. However, contamination of API, high cost for the manufacturing of APIs, the requirement of highly skilled technicians, fierce competition between API players, stringent regulatory policies, and rising environmental concerns are the factors that are hindering API market growth.
The global API market is segmented based on the synthesis, business type, therapeutic applications, and geography. Depending on synthesis the market is classified into synthetic API, biotech API, and HPAPI (High Potent Active Pharmaceutical Ingredient). Synthetic API held the maximum share of xx% in 2020 and is expected to grow at mid single digit CAGR from 2020 to 2027 owing to patent expiration of synthetic drugs (small molecule drugs), an increasing number of small molecules in clinical trials, increasing outsourcing by the pharmaceutical companies, expansion of CMO manufacturing facilities through huge investments, rise in the incidence of chronic and age-related diseases, rapid growth in the oncology market, technological advancements like cryogenic and continuous flow manufacturing. The Biotech API accounted for the share xx% in 2020 and is expected to reach $xx million by 2027 growing at a double digit CAGR from 2020 to 2027.
Among Biotech API by product type, Monoclonal antibodies accounted for the largest share of xx% in 2020. The vaccines segment is projected as the fastest-growing segment with the low teen CAGR from 2020 to 2027 to reach $xx million by 2027 owing to its crucial role in maintaining sustainable health thereby strengthening the individual immune response to different infections and also due to the outbreak of novel coronavirus throughout the globe there is a fierce competition among various pharmaceutical, biotechnology, and healthcare organizations to develop and commercialize their innovations or breakthrough vaccines and drugs to the market to treat the COVID-19.
API global market based on business type is segmented into captive and merchant. The captive market accounted for the largest revenue of $xx million in 2020 and is expected to grow at a mid single digit CAGR from 2020 to 2027 to reach $xx million by 2027. The market growth is medium due to the increase in outsourcing, availability of advanced manufacturing facilities and skilled labour, reduced time to market, increased focus on research and development, and other core areas of competence. The merchant market is expected to grow at a double digit CAGR from 2020 to 2027 to reach $xx million by 2027, due to increasing outsourcing, advanced manufacturing facilities, lack of in-house manufacturing capability, high capital investment, and high cost of API manufacturing.
Among applications, the infectious disease segment accounted for the largest revenue of $xx million in 2020 mainly driven by the rise in demand for anti-infective drugs especially to treat novel coronavirus disease which was declared as a global pandemic in March 2020 by World Health Organization (WHO). The oncology segment is expected to grow at a double digit CAGR from 2020 to 2027 to reach $xx million by 2027.
Geographically, the API market is segmented into North America, Europe, Asia-Pacific, and the Rest of the world regions. North American region dominated the global API market with a share of xx% in 2020 and is expected to grow at a mid single digit CAGR from 2020 to 2027 to reach $xx million by 2027. Asia Pacific region is expected to grow at a double digit CAGR from 2020 to 2027 to reach $xx million by 2027. Low labour cost, abundance availability of raw materials, infrastructure facility, rise in generic drug demand, increased prevalence of infectious and other chronic diseases, increased production capabilities, presence of a large number of domestic and international players, and concentration of CMO companies are some of the factors that are driving the market growth.
During the pandemic due to the non-availability of vaccines and lack of specific therapeutics, many of the repurposed drugs were in high demand for the treatment of COVID-19. Some of the repurposed APIs which are of high demand are Hydroxychloroquine Sulphate, Chloroquine Phosphate, Remdesivir, Lopinavir, Ritonavir, Baricitinib, Methylprednisolone, dexamethasone, and others. For instance, in May 2020 to treat hospitalized COVID-19 patients, the U.S. FDA granted the first Emergency Use Authorization (EUA) for Gilead Sciences’ (U.S.) Veklury (remdesivir) which was developed for treating Ebola. Hydroxychloroquine, a drug used to treat malaria, autoimmune diseases, and rheumatoid arthritis was used to treat COVID-19 and had high demand during second quarter of 2020.
Due to the surge of internal demand for crucial raw materials and the APIs for the production of finished drug products, urged the intervention of the individual government for API production. For instance, to reduce the reliance on foreign countries for life-saving ingredients the U.S. legislation introduced a bipartisan bill to further strengthen the National security Act and America's Supply Chain and requiring detailed information about the supply of each API requiring high incentives to lure outsourced manufacturing companies away from China. In May 2020, the U.S. government made a four-year contract agreement with Phlow Corporation (U.S.) with a $354.0 million funding to manufacture most essential medicines at risk of shortage, including medicines for the COVID-19 pandemic response. As the COVID-19 continued to challenge the global API supply chain, most of the nations are looking for newer ways to enable their domestic manufacturers to scale up the production for their native market. In this regard, an Israel based company Wavelength Pharmaceuticals in February 2021 made an agreement to acquire Vanamali Organics an Indian based firm for an undisclosed amount. Vanamali Organics is specialized in manufacturing of key starting materials and intermediates that will add to Wavelengths’ API contract manufacturing work.
In the global API market, the manufacturers are strategically enhancing their capabilities by expansion, collaborations, product approvals, acquisitions, investments, and manufacturing capacity and technologies. For instance, in July 2020, Cambrex Corporation initiated for increased drug substance manufacturing capacity at Sweden facility by investing $3.6 million. The unit will include an additional production line at a 6 m³ scale thereby increasing the production capacity up to 25%.
Among the total FDA approved new drugs during 2019 and 2020 there was a substantial year on year increase in the percent share of biologics approved. Few biologic drugs approved in 2020 include Ebanga (Ansuvimab), Inmazeb (Atoltivimab, maftivimab, and odesivimab), Margenza (Margetuximab), Danyelza (Naxitamab), Enspryng (Satralizumab), Monjuvi (Tafasitamab), and Uplizna (Inebilizumab). Due to increased demand for biotech products, API manufacturers are expanding their manufacturing capacity in order to maintain their leadership. For instance, in January 2021, Fujifilm and The Massachusetts Center for Advanced Biological Innovation and Manufacturing (CABIM) received $76.0 million in funding and the company leased a 40,000-square-foot site at the U.S. for R&D and manufacturing of cell and gene therapy, gene editing, immunotherapy, and biotechnology.
According to the Drug Establishments Current Registration Site (DECRS), there are xx FDA approved API manufacturing facilities. Among these, xx facilities are in the U.S., xx facilities are in India, and xx facilities are in China. The U.S. FDA inspects API manufacturers globally in order to verify the operational reality at the manufacturing site. If not met with the standards and violate the food drug and cosmetic act, a form 483 is issued. In 2020, the FDA issued Form 483 to approximately xx API manufacturers across the globe. Based on molecule type, xx biologics manufacturers and xx small molecule API manufacturers received Form 483.
In the last few years, though there is an increase in the growth of the biologics market, small molecules continue to dominate the global therapeutics market. Many small molecules are going off-patent, paving the way for generics into the market through ANDA approval. In 2020, xx new small molecule-based drugs received ANDA approval, creating a favorable opportunity for API manufacturers. Because of the aggressive strategy of various domestic pharma companies wanting to strengthen their product pipeline for the lucrative developed nations market, there is fierce competition among various players. As a result, most of the companies file detailed information about the products, manufacturing process, and facilities through Drug Master File (DMF) under FDA. In 2020, approximately xx Type II drug master files were filed in FDA. Indian API manufacturers alone accounted for xx% (xx drug master files) of the total global drug master filings during 2020.
The global small molecules’ manufacturing installed capacity is estimated to be xx million Litres in 2020. Total small molecule utilization volume is xx million liters at a xx% capacity utilization rate and is expected to grow at a mid single digit CAGR from 2020 to 2027 to reach xx million liters volume by 2027. The global biologics manufacturing installed capacity is estimated to be xx million Litres in 2020. The utilization volume is estimated to be xx million liters at a capacity utilization rate of xx% and is expected to grow at a double digit CAGR from 2020 to 2027 to reach xx million liters volume by 2027. The global API production in 2020 is estimated to be xx Metric tons of which small molecule API production is xx Metric tons and biologics API production is xx Metric tons.
The API market is highly fragmented with top 10 players occupying a minor market share. Major players in the API market include Carlyle Group (AMRI, U.S.), Aurobindo Pharma Ltd (India), Boehringer Ingelheim GmbH (Germany), Permira funds (Cambrex Corporation U.K.), Divis Laboratories (India), Olon S.p.A (Italy), Lonza Group (Switzerland), Pfizer Inc. (U.S.), Sanofi S.A. (France), Seigfried Holdings AG (Switzerland), Thermo Fisher Scientific (Patheon N.V., U.S.) and Teva Pharmaceutical Industries Ltd (Israel).