Active Pharmaceutical Ingredients (API) Market- Growth, Trends, COVID-19 and Forecasts (2021 - 2026)

Market Overview

The active pharmaceutical ingredients (API) market was valued at approximately USD 174.96 billion in 2020, and it is expected to reach USD 245.88 billion by 2026, registering a CAGR of nearly 5.84% during the forecast period, 2021-2026.

In 2020, the outbreak of the COVID-19 pandemic had a favorable impact on the market as the countries and major players are manufacturing huge amounts of ingredients to maintain the demand for the treatment of COVID 19. The outbreak of COVID-19 has led drug manufacturers to redirect their models to focus on a larger pool of patients. For example, the United States requested that hydroxychloroquine (HCQ) be imported from India as a treatment for coronavirus. The virus has also disrupted the drug supply chain in Canada and may cause problems for patients in the country. Canadian pharma majors expand their programs with countries other than China to gain access to new regions.

The key factors boosting the growth of the active pharmaceutical ingredients market are the rising drug research and development activities for drug manufacturing, the rising importance of generics, and the increasing uptake of biopharmaceuticals. However, the unfavorable drug price control policies across various nations and high manufacturing costs are expected to hinder the growth of the market.

The increasing prevalence of chronic diseases is expected to increase the demand for drugs, which is expected to fuel the active pharmaceutical ingredients market growth in the near future. According to the World Health Organization (WHO), cardiovascular diseases are the leading cause of death globally, accounting for an estimated 17.9 million lives each year.

The Alzheimer's Association stated that around 5.8 million people in the United States were living with Alzheimer’s disease in 2018. This disease is the sixth-leading cause of death in the United States and is more prevalent among people above 65 years of age (and approximately 5.6 million patients fall in this age bracket). With the baby-boomer generation reaching around 65 years of age, this number is expected to reach 14 million, worsening the situation over the forecast period. By 2050, a new case of the disease is expected to develop every 33 seconds. ​

Moreover, the launches of new drugs and biological products, acquisitions, collaborations, and regional expansions are some of the strategic initiatives to maintain stability in the market. This is likely to fuel the market growth in the near future. For instance, in 2020, Quartic.ai and Bright Path Labs collaborated to develop AI-based technology for continuous manufacturing of critical APIs that are required for producing crucial small-molecule drugs.

The active pharmaceutical ingredients (API) market has traditionally been dominated by drugs, such as anti-infectives and diabetes, cardiovascular, analgesics, and pain management drugs. However, as per the R&D trends, the demand is shifting toward the development of complex APIs used in novel formulations, targeting niche therapeutic areas.

The major factors limiting the market growth include drug price control policies across various countries, fierce competition among existing players, and stringent regulatory policies.​

Scope of the Report

Active pharmaceutical ingredient (API) is a part of any drug that produces its effects. Some drugs, such as combination therapies, have multiple active ingredients to treat different symptoms or act in different ways. They are produced using highly technological industrial processes, both during the R&D and the commercial production phase. The active pharmaceutical ingredients (API) market is segmented by business mode (captive API and merchant API), synthesis type (synthetic and biotech), type of drug (generic and branded), application (cardiology, pulmonology, oncology, ophthalmology, neurology, orthopedic, and other applications), and geography (North America, Europe, Asia-Pacific, Middle-East and Africa, and South America). The report offers the value (in USD billion) for the above segments.

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Key Market Trends

The Cardiology Segment is Expected to hold the Largest Market Share

Presently, the pulmonology segment has been experiencing a high peak in growth due to the pandemic, as the pharma industry is at the lead of the combat against COVID-19 and has responded to this global challenge by guaranteeing the availability of medicines in spite of supply chain interruptions.

The cardiology segment holds a significant share due to the vast population using various CVD drugs owing to the high prevalence of cardiovascular diseases. According to the European Society of Cardiology 2019 Statistics, cardiovascular diseases (CVD) remain the leading cause of mortality and a major cause of morbidity in Europe. Currently, there are more than 6 million new cases of CVD in the EU and more than 11 million in Europe as a whole, every year. With almost 49 million people living with the disease in the EU, the cost to the EU economies is high at EUR 210 billion a year.

The oncology segment is also expected to grow significantly during the forecast period owing to the high prevalence of cancer in the last few decades, and the disease is expected to claim a more prevalent population during the forecast period. Market players are continuously developing new APIs to cater to the need in the oncology segment globally. In December 2019, Dr Reddy's Laboratories launched Bortezomib for injection in the US market, a generic version of Velcade of Millennium Pharmaceuticals. Bortezomib is used for the treatment of adult patients with multiple myeloma or with mantle cell lymphoma who have received at least one prior therapy.

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