Active Pharmaceutical Ingredient Market to Exhibit Profitable Growth during the Forecast Period
The global active pharmaceutical ingredient market is growing significantly, valued at US$ 152.6 Bn in 2017 and expected to reach US$ 273.7 Bn by 2026. Worldwide growing chronic diseases, along with rising respiratory, cardiovascular, and oncology incidences, drive the overall market growth during the forecast period. In addition, new technological progress in biologics & other specialty drugs along with favorable public and private funding in the pharmaceutical sector across various developing countries will further assist in the API market growth. Furthermore, increased manufacturing for synthetic and biological active ingredients is growing significantly; API manufacturers have been manufacturing their own medications to increase overall revenues. However, due to stringency in regulations & quality checks, new players cannot enter the market. For example, in 2013, unbranded drugs represented over 80% of the physician-recommended drugs being circulated, fundamentally because of their low cost for patients, payers, and the healthcare insurance system in the U.S. Also, the rise in the interest for generic prescriptions worldwide is one of the major drivers in the global API market during the forecast period.
A major focus on commercializing generic drugs and lessening cost expenses by outsourcing R&D exercises from top manufacturers worldwide can significantly enhance the effectiveness of API product growth. In addition, technological developments in synthetic chemical API, small molecules, steroidal & carbohydrate drugs, and peptides in therapeutic treatment procedures are enhancing the demand majorly in Europe and the Asia Pacific.
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Market Synopsis
Synthetic Chemical API Type Segment is expected to Register Higher Growth by the End of 2026.
Synthetic chemical API type held the largest market share in 2017. Increased manufacturing by utilizing enhanced molecular applications has contributed to the maximum revenue share in the global market. Increasing applications for synthetic drugs and the rise in non-communicable disorders with high mortality rates in recent years will increase the demand for synthetic drugs and biologics in the coming years. As indicated by WHO, Non-Communicable Disease fact sheet 2017, equivalent to around 70% of all expiries worldwide. However, high complexity occurs during the manufacturing along with high cost. The biological API segment is also growing significantly; it is further classified into vaccines, monoclonal antibodies, and recombinant proteins. Extensive R&D on advanced protein-based molecular therapies and biosimilar drugs is enhancing the growth of biological API during the forecast period. Also, the increasing demand for biologics in developing nations is growing significantly.
The Branded Drugs Segment is expected to Register Higher Growth by the End of 2026.
The demand for branded drugs has been influenced globally, increasing acceptance from the end user, and enhanced applications in the field of oncology, cardiology, anti-inflammatory, gastrointestinal and neurological disorders have shown significant growth of branded drugs in recent years. As a result, new product launches, innovative delivery formulation techniques, and the production of brand-new chemical entities in branded drugs are gaining traction in the global market.
Manufacturers are also focused on targeted delivery and extended release of proven APIs. Also, they are collaborating with start-ups and research institutes, focusing on unmet oncology needs of high prevalence in the Asia Pacific region. Furthermore, rising interest in novel drug discovery and progressions in biotechnology, molecular science, and genomics is developing faster. Also, the populated pipeline for branded drugs combined with the patent expiry of a few different drugs and expanded use of healthcare services are also driving market development during the forecast period. Nevertheless, massive investments, a gradual shift of branded drugs to generic drugs sales & marketing, and overdue processing of federal regulations are hindering the market growth.
The cost viability of generic medications has given it an upper hand over branded drugs. Moreover, the members in the business inventory network system, for example, retail pharmacies, wholesalers, drug stores, and hospital pharmacies, additionally have an advantage from the overall sale and demand for generic drugs globally since it increases the net revenue & profit margin. This has developed as a key development driver for the generic drugs industry. Generic drug manufacturers likewise receive licensing authorization and partnering business strategies with small-scale manufacturers to dispatch new drugs or medications effectively and provide full assurance that their market flourishes in the domestic & international markets.
Contract Manufacturing for API Market Is Showing Promising Growth in the Developing Nations
There is the developing requirement for cutting-edge procedures and technology advancements, which have demonstrated exceptionally viable in meeting regulatory necessities internationally. As a result, top pharmaceutical and drug manufacturers (branded/generic) of the world are increasingly looking at Asian companies, mainly in India and China, as their strategic knowledge growth partners at all levels of the supply & value chain, be it in the form of contract research, contract manufacturing, preclinical, clinical trials or of late, contract selling and contract marketing.
Also, pharmaceutical organizations have been coordinating their needs toward the core competency areas, hence, prefer not to dispense available resources, expertise, and technology in formulating the final dose of medicines. The high cost of production is the primary factor for the decrease in market share in the North American region, wherein an expanded number of organizations are setting up manufacturing offices in developing nations or working through contract manufacturing. For example, China has improved its overall capacity for API manufacturing although India is a superior destination for drug discovery, drug formulation development, and contract manufacturing. There is solid and continued spending on processing and manufacturing capabilities in the biopharmaceutical and biosimilar segment, a great opportunity for pharma-biotech players to spur revenue growth during the forecast period. Other external factors driving the API market are the demand for new production technologies in the bio-pharma segment, the rising consolidation of big pharmaceutical giants, and demand for expertise in drug discovery, biologics, and injectable dose formulations, and the expansion of contact manufacturing into the early stages of drug manufacturing.
Presence of Established Pharmaceutical Manufacturers Holds North America in Dominant Position
North America held the maximum market share in 2017 due to top manufacturers for branded generics in the U.S & Canada. Also, the increasing prevalence of cancer & numerous chronic diseases, growing population, and development of novel drugs, along with rising manufacturing capacity expansion, will spur revenue growth during the forecast period.
Countries in the Asia Pacific region, such as India and China, are expected to register moderately significant CAGR over the forecast period due to an increasing number of partnerships with top bio-pharma players, private & public funding for new drug formulation technologies, drug discovery, and growing awareness among the end users about new branded drugs is gaining traction in the market. Additionally, the high prevalence of cancer, increased adoption rate of generic medications in emerging economies, new technology advancements with improved drug efficacy at low cost, and rising demand for biologics is expected to drive the active pharmaceutical ingredient market during the forecast period.
Dominance of Established Multinational Players with Strong API Type Portfolio Makes Market Penetration Difficult For Emerging Players
Pfizer, Inc., Sanofi, Boehringer Ingelheim, Novartis International AG, Bristol-Myers Squibb, and Eli Lilly and Company are major players in the active pharmaceutical ingredient market GlaxoSmithKline plc, Merck & Co., Inc., and AbbVie Inc., Lonza Group and others. These companies are mainly focused on new product development, partnerships, and expansion of their manufacturing capacity to further generate maximum share in the global API market.
For instance, in February 2018, Rising Pharmaceuticals (ACETO Corporation subsidiary) launched Atenolol tablets (25mg, 50mg, and 100mg) for hypertension. It is a generic form of the reference drug, TENORMIN (Alvogen Malta Operations LTD).
In January 2018, as an innovation strategy, Sterling Pharma Solutions expanded its manufacturing capacity in the Asian international market, making new API production and design developments with major growth experienced in the Japanese market.
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Historical & Forecast Period
This study report represents an analysis for each segment from 2016 to 2026 considering 2017 to be the base year. Compounded Annual Growth Rate (CAGR) for each of the respective segments estimated for the forecast period from 2018 to 2026.
Segmentation By API Type Segment (2016–2026; US$ Bn)
- Synthetic Chemical API
- Biological API
By Drug Type Segment (2016–2026; US$ Bn)
- Branded Drugs
- Generic Drugs
- OTC Drugs
By Manufacturing Type (2016–2026; US$ Bn)
- Contract Manufacturers
- Captive Manufacturers
Geography Segment (2016–2026; US$ Bn)
- North America (the United States and Canada)
- Europe (U.K., Germany, Rest of Europe)
- Asia Pacific (China, Japan, Rest of Asia Pacific)
- Latin America (Brazil, Mexico, Rest of Latin America)
- the Middle East and Africa (GCC, Rest of MEA)
The present report also comprehends qualitative and quantitative market valuation factors such as key market drivers, market trends, restraints, and opportunities to better understand the overall active pharmaceutical ingredient market. The report also presents a graphical representation of the competitive landscape based on market inventiveness and strategies, API Type portfolio, and business strengths. Key industrial players profiled in the study report are Teva Pharmaceutical Industries Ltd., Pfizer, Inc., Sanofi, Boehringer Ingelheim, Novartis International AG, Bristol-Myers Squibb, Eli Lilly and Company, GlaxoSmithKline plc, Merck & Co., Inc. and AbbVie Inc., Lonza Group and others.
