Active Pharmaceutical Ingredients (API) Market- Growth, Trends, COVID-19 and Forecasts (2023 - 2028)

Active Pharmaceutical Ingredients (API) Market Analysis

The active pharmaceutical ingredients (API) market was valued at approximately USD 177.05 billion in 2021, and it is expected to reach USD 258.60 billion by 2027, registering a CAGR of nearly 7.50% during the forecast period 2022-2027.

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

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 US were living with Alzheimer’s disease in 2020. This disease is the sixth-leading cause of death in the US and is more prevalent among people aged above 65 years (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 being taken by the companies to maintain stability in the market. This is likely to fuel market growth in the near future. For instance, in 2020, Quartic.ai and Bright Path Labs collaborated to develop AI-based technology for the 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 developing 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.​

Active Pharmaceutical Ingredients (API) Industry Segments

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), by synthesis type (synthetic and biotech), by type of drug (generic and branded), by application (cardiology, pulmonology, oncology, ophthalmology, neurology, orthopedic, and other applications), and by geography (North America, Europe, Asia-Pacific, Middle-East and Africa, and South America). The report also covers the estimated market sizes and trends for 17 different countries across major regions globally. The report offers the value (in USD billion) for the above segments.

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Active Pharmaceutical Ingredients (API) Market Trends

This section covers the major market trends shaping the Active Pharmaceutical Ingredients (API) Market according to our research experts:

Cardiology Segment Expected to Hold the Largest Market Share

The pulmonology segment has been experiencing a high peak in growth due to the COVID-19 pandemic as the pharma sector is at the forefront in the combat against COVID-19 and has responded to this global challenge by guaranteeing the availability of medicines despite 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 affect a higher portion of the 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, a generic version of Velcade of Millennium Pharmaceuticals, in the US market. Bortezomib is used to treat adult patients with multiple myeloma or with mantle cell lymphoma who have received at least one prior therapy.

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