Active pharmaceutical ingredients (APIs) are active ingredients or substances that produce a positive health effect on the patient to cure a specific condition or disease. Some medications, like combination therapy, contain several APIs that may work differently or address various symptoms. Hence, APIs are of great importance in both pharmaceutical and biopharmaceutical industries for drug and therapeutics manufacturing.
Paracetamol or acetaminophen is one of the widely used medications for the treatment of fever and mild to moderate pain, owing to its analgesic and antipyretic effects. It is a key component in several prescription analgesics and cold and flu medications, and due to the high prevalence of fever and pain among the global population, its demand is increasing globally. For instance, as per the analysis of Mordor Intelligence and a study from BMC journal, the estimated global prevalence of active headache disorder is about 52%. The demand for acetaminophen API is growing in the pharmaceutical industry.
How Fast Is the Global API Market Growing?
According to the latest report by Mordor Intelligence, titled Active Pharmaceutical Ingredients (APIs) Market - Growth, Trends, COVID-19, And Forecasts (2023-2028), the global API market is anticipated to reach USD 258.60 billion by 2027 from USD 177.05 billion in 2021.
The factors that are expected to drive the growth of the API market include the rising burden of target diseases, such as infectious, cardiovascular, cancer, diabetes, and other diseases, and the increasing demand for biologicals and biosimilars, globally. For instance, as per the October 2022 report of the World Health Organization (WHO), about 10.6 million people were diagnosed with tuberculosis (TB) in 2021, as compared to 10 million people in 2020 globally. As per the same source, about 1.2 million children were among people who fell ill with TB in 2021. With the growing burden of diseases, the demand for therapeutics is also increasing. As a result, the consumption of APIs is increasing, which is driving the growth in the market studied.
Further, technological and clinical advancements in drug discovery and development, along with expansion by the companies in the area, are expected to boost the demand for APIs as these developments may accelerate the manufacturing and production of novel therapeutic drugs where APIs are used as raw materials. For example, in July 2022, WuXi Biologics launched its latest drug product facility, DP5, in WuXi, China. With this launch, there are a total of nine drug product facilities that are operating under WuXi Biologics.
Rising Consumption of APIs and Pharmaceuticals
In recent times, the burden of chronic disease has increased significantly around the world, putting immense pressure on the healthcare system of respective countries. This has led to greater production and consumption of pharmaceuticals, which is one of the major factors driving the demand for APIs.
India is one of the major exporters of pharmaceutical products in the world, and as per the 2021 bulletin of the Reserve Bank of India (RBI), the export of pharmaceutical products from India has increased with a compound annual growth rate (CAGR) of 9% from 2008-09 to 2020-2021, and by value, export increased significantly to USD 24.4 billion in FY2021 from USD 20.7 billion in FY2020 owing to the sudden surge in demand due to COVID-19. Further, as per the same source, in FY2021, of the total export value, about 78% was from drug formulations and biologicals, which was about 77% in FY2020. This data shows an increasing trend in demand for pharmaceutical products, and hence, the API market is growing.
Similarly, the August 2022 report of the Indian Brand Equity Foundation (IBEF) reported that over 50% of the world's demand for various vaccines is met by the Indian pharmaceutical industry, as is 40% of generic demand in the United States and 25% of all pharmaceuticals in the United Kingdom. Further, as per the IBEF’s latest findings, the Indian pharmaceutical market will be about USD 120-130 billion by 2030.
In addition, as per the 2022 report from the European Federation of Pharmaceutical Industries and Associations (EFPIA), the production value of pharmaceutical products in Europe has increased significantly, from USD 207.9 billion in 2010 to about USD 312.4 billion in 2021. Hence, the growing pharmaceuticals market is expected to drive the demand for the APIs to produce therapeutic drugs and other products, which are expected to fuel the growth of the market in coming years.
Top Growth Segments in the API Market
- The API market is categorized into five segments: business mode, synthesis type, type of drug, application, and geography.
- Over the forecast period, the captive API segment by business mode is expected to hold a major share of the market owing to the high demand from the companies for in-house production of pharmaceuticals.
- By type of drug, the generic segment will grow at the highest CAGR as compared to branded segment over the forecast period due to the low-cost and high demand for generic drugs.
- By geography, North America is the largest consumer of active pharmaceutical ingredients and is expected to hold a major share of the market due to the presence of one of the highest numbers of pharmaceutical and biopharmaceutical companies and heavy consumption of pharmaceuticals in the country.
- Some of the key companies in the market are Pfizer Inc., BASF SE, Teva Pharmaceuticals, Novartis AG, and Dr. Reddy’s Laboratories Ltd., among many others.
The Future of API Market
- The development and commercialization of advanced therapies such as cell and gene therapy, along with others, are expected to be a significant booster for the API market.
- New investment in research and development of APIs and drugs are expected to lead to the development of novel APIs and fuel their demand for the development of novel therapeutic products.
- Moreover, technological advancement in API development and manufacturing is expected to complement the growth of the market. For example, in April 2022, Pharmira Co., Ltd. started working on developing a Continuous Manufacturing (CM) technology for active pharmaceutical ingredients (APIs) and intermediates, as well as a business for contract development and manufacturing.
Where to Learn More
The report Active Pharmaceutical Ingredients (API) Market - Growth, Trends, COVID-19, and Forecasts (2023-2028) offers a detailed quantitative and qualitative analysis of the market, providing insights into market driving and restraining factors, Porter’s Five Forces Analysis, detailed segmentation analysis, competitive landscape, and future opportunities of the market. The report offers detailed qualitative and quantitative insights for 17 different countries across major regions that include North America, Europe, Asia-Pacific, Middle East & Africa, and South America.
About Mordor Intelligence
Mordor Intelligence has delivered precise data and actionable insights to more than 4,000 enterprises across 100 countries. The firm's domain-specific teams of research experts continuously track markets, providing clients a competitive edge through high-quality market intelligence.