| REPORT ATTRIBUTE |
DETAILS |
| Historical Period |
2019-2022 |
| Base Year |
2023 |
| Forecast Period |
2024-2032 |
| US Active Pharmaceutical Ingredient (API) Market Size 2023 |
USD 35,805.37 Million |
| US Active Pharmaceutical Ingredient (API) Market, CAGR |
7.88% |
| US Active Pharmaceutical Ingredient (API) Market Size 2032 |
USD 65,686.44 Million |
Market Overview:
The US Active Pharmaceutical Ingredient (API) market is poised for significant growth, with projections estimating a rise from USD 35,805.37 million in 2024 to USD 65,686.44 million by 2032, translating to a CAGR of 7.88%.
The US API market is experiencing significant growth driven by several key factors. The rising prevalence of chronic diseases, such as diabetes and cardiovascular conditions, underscores the continuous demand for effective medications, thus increasing the need for APIs. Moreover, the pharmaceutical industry’s focus on innovation and new drug development necessitates a reliable supply of high-quality APIs to translate research advancements into tangible patient benefits. This emphasis on innovation also contributes to the growing demand for complex APIs, particularly those used in biologic drugs, further fueling market expansion.
In terms of market players and landscape, the US API market comprises a diverse mix of established pharmaceutical corporations with captive API manufacturing facilities and merchant API suppliers specializing in supplying APIs to various pharmaceutical companies. Additionally, contract research organizations (CROs) and contract manufacturing organizations (CMOs) play vital roles in API development and production, providing specialized expertise and resources to pharmaceutical firms. While the market is currently geographically concentrated in a few key states with robust infrastructure and skilled labor, efforts to strengthen domestic API production capabilities are expected to lead to a more geographically diverse market landscape in the future. This diversification is likely to involve the establishment of new manufacturing facilities in regions offering the necessary resources and expertise.
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Market Drivers:
Rising Prevalence of Chronic Diseases:
The increasing incidence of chronic conditions in the US population is indeed a significant driver of API market growth. For instance, the Centers for Disease Control and Prevention (CDC) reported that 6 in 10 adults in the US have a chronic disease, and 4 in 10 adults have two or more. Chronic diseases such as heart disease, cancer, and diabetes are the leading causes of death and disability in the United States. As the prevalence of these conditions continues to rise, so does the demand for effective medications and the APIs that make them possible. More than half (51.8%) of adults had at least one of 10 selected diagnosed chronic conditions such as arthritis, cancer, chronic obstructive pulmonary disease, coronary heart disease, current asthma, diabetes, hepatitis, hypertension, stroke, and weak or failing kidneys. Furthermore, approximately 133 million Americans, representing more than 40% of the total population of this country, are affected by chronic diseases.
Focus on Innovation and New Drug Development:
The pharmaceutical industry is constantly innovating and developing new drugs to address various medical needs. For instance, in 2020, the FDA approved 53 novel drugs, many of which are for rare or severe conditions. This focus on research and development (R&D) translates to a heightened demand for specialized APIs. These novel therapies often require complex and specific APIs, further fueling market growth. Some of the top drug development trends in 2024 include AI & Data Analytics, Patient-centric Trials, Assay Development, Advanced Manufacturing, Synthetic Biology, Virtual Trials, High-performance Computing, 3D Cell Culture, and Cybersecurity.
Shifting Manufacturing Landscape and Domestic Production:
Global competition and cost pressures have historically led some pharmaceutical companies to source APIs from countries with lower production costs. However, for instance, the COVID-19 pandemic highlighted the risks associated with over-reliance on foreign API suppliers. This has prompted a renewed focus on domestic API production within the US. This shift presents significant opportunities for US-based API manufacturers to cater to the growing demand for high-quality, reliably sourced ingredients. Recent studies show that more than 80% of APIs for essential medicines and across key therapeutic areas have no US manufacturing source. Less than 5% of large-scale API sites, globally, are located in the US.
Growing Demand for Complex APIs:
Advancements in biopharmaceutical technology are leading to the development of more intricate and specialized drugs. These next-generation therapies often require complex APIs with unique properties and functionalities. The ability to manufacture and supply these complex APIs effectively will be a key differentiator for market players. As the demand for such advanced therapies grows, the API market will need to adapt and evolve to meet these changing requirements.
Market Trends:
Rising Demand for Complex APIs:
This growth is driven by advancements in biopharmaceutical technology, leading to the development of more complex and specialized APIs. To meet this demand, API manufacturers are investing in advanced manufacturing capabilities. For instance, in 2022, WuXi STA, a subsidiary of WuXi AppTec, opened a high potency API (HPAPI) plant in China, and MilliporeSigma, the life-science business of Merck KGaA, opened a new $65-million HPAPI manufacturing facility in Verona, Wisconsin.
Resurgence of Domestic API Production:
In the US, concerns about quality control and supply chain security are prompting a resurgence of domestic API manufacturing. In 2020, the dollar value of API made in the US accounted for a majority (53%) of the $86.1 billion of API used in medicines consumed in the US. This trend is being driven by heightened awareness of quality control issues, a focus on supply chain security, and government initiatives supporting domestic production. For instance, the Biden-Harris Administration announced that it will take immediate action to shore up the US’s pharmaceutical supply chain by establishing a consortium to prioritize onshoring of essential medicine production and financially supporting the domestic production of APIs. This move aims to ensure compliance with stringent regulatory standards such as Good Manufacturing Practices (GMP) and mitigate risks associated with global supply chain disruptions.
Market Challenges Analysis:
Challenges of Reliance on Foreign API Suppliers
Historically, the US pharmaceutical industry has heavily relied on foreign suppliers, primarily from countries like India and China, for sourcing APIs due to lower production costs and available manufacturing infrastructure. However, this dependence raises significant concerns, including lapses in quality control, counterfeit drugs entering the supply chain, and risks associated with geopolitical tensions and trade disputes. Such vulnerabilities can disrupt the drug supply and compromise patient safety, highlighting the need for greater domestic API production capacity and enhanced regulatory oversight to mitigate these risks effectively.
Regulatory Stringency and Cost Pressures
The US FDA imposes stringent regulations on API manufacturing to ensure quality and safety, which are essential but can be challenging and costly to comply with. Smaller API manufacturers in the US may struggle to meet these regulatory standards, impacting their ability to invest in infrastructure and quality control processes. Moreover, pressure to control healthcare costs can lead to pricing competition for generic drugs, squeezing profit margins and hindering investment in innovation and capacity expansion. To address these challenges, incentivizing domestic API manufacturing investment, strengthening regulatory collaboration across countries, and exploring innovative manufacturing technologies can help enhance efficiency, quality, and competitiveness in the US API market.
Segmentation Analysis:
By Type
In the pharmaceutical industry, two primary business models shape the API manufacturing landscape. Captive API manufacturers, typically pharmaceutical companies, produce APIs for internal use in their drug development and production processes. While this model offers greater control over quality and supply chain management, it requires substantial investments in manufacturing infrastructure and skilled personnel. On the other hand, Contract API suppliers, also known as Merchant API manufacturers, operate independently and cater to various pharmaceutical companies under contract. These suppliers provide flexibility and economies of scale, enabling pharmaceutical firms to outsource API production based on their specific requirements. The growth of this segment is anticipated to be driven by the increasing demand for cost-effective API solutions, as pharmaceutical companies seek to streamline their operations and focus on core competencies.
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By Product
The API market is segmented into generic APIs and innovative APIs, each serving distinct needs within the pharmaceutical industry. Generic APIs are utilized in the production of generic drugs, offering cost-effective alternatives to brand-name medications. With the rising prevalence of chronic diseases and a growing focus on healthcare affordability, the demand for generic APIs is expected to continue its upward trajectory. Conversely, the innovative APIs segment encompasses APIs used in novel and complex drugs, including biopharmaceuticals and targeted therapies. The emphasis on research and development and the pursuit of new, life-saving treatments will be significant drivers of growth in this segment. However, innovative APIs often entail higher production costs and stringent regulatory requirements, presenting both opportunities and challenges for manufacturers operating in this space.
Segments:
Based on Type
Based on Product
Based on Application
- Oncology
- Cardiovascular diseases
- Diabetes
- Communicable diseases
- Orthopedic and others
Based on Region
- Northeast
- Southeast
- Midwest
- Southwest
- West
Regional Analysis:
West Region
The West Region captures the largest market share in the US API market, estimated at around 35-40%. This dominant position can be attributed to the presence of several leading pharmaceutical companies and a well-established manufacturing base in states like California, Washington, and Colorado. The region’s strong focus on research and development, coupled with a highly skilled workforce, contributes to its significant market share.
Northeast Region
The Northeast Region holds a substantial market share of approximately 25-30%. This region benefits from the concentration of prominent pharmaceutical companies, research institutions, and a robust infrastructure for API manufacturing in states such as New Jersey, New York, and Massachusetts. The region’s access to skilled labor and proximity to major markets further solidify its position in the API market.
Key player:
- Amneal Pharmaceuticals Inc.,
- Apotex Inc.
- Aurobindo Pharma Ltd.
- Bristol Myers Squibb Co.
- Cadila Pharmaceuticals Ltd.
- Cambrex Corp.
- Cipla Ltd.
- Dr Reddys Laboratories Ltd.
- GlaxoSmithKline Plc
- Koninklijke DSM NV
- Lupin Ltd.
- Merck KGaA
- Novartis AG
- Pfizer Inc.
- Sanofi SA
- Sun Pharmaceutical Industries Ltd.
- Teva Pharmaceutical Industries Ltd.
- Thermo Fisher Scientific Inc.,
- Viatris Inc.
Competitive Analysis:
The US API market features a blend of established pharmaceutical giants and emerging players. Major pharmaceutical companies often possess in-house API production capabilities, while others rely on external merchant API suppliers. This competitive landscape fosters innovation, with established players leveraging their extensive resources for research and development. Meanwhile, merchant API suppliers compete on cost-effectiveness and quality control. Contract research organizations (CROs) and contract manufacturing organizations (CMOs) also play a crucial role, offering specialized expertise in API development and production. This mix of in-house capabilities, merchant suppliers, and specialized service providers creates a dynamic environment where competition drives advancements in API quality, efficiency, and overall market growth.
Recent Developments:
In April 2023, Aurobindo Pharma approved the transfer of two API units (Unit V and XVII) to its wholly-owned subsidiary Apitoria Pharma Private Limited.
In January 2023, Novartis sold its active pharmaceutical ingredient (API) manufacturing facility in Ringaskiddy, Ireland, to Sterling Pharma Solutions. Under the terms of the agreement, Novartis continues to manufacture several APIs for cardiovascular, immunology, and oncology medicines at Ringaskiddy.
In 2022, Pfizer entered into an agreement with Acuitas to deliver a lipid nanoparticle delivery system for use in mRNA vaccines such as COMIRNATY ((tozinameran) and therapeutics.
In 2022, Sanofi and IGM announced a strategic collaboration agreement to streamline and optimize the development and commercialization of IgM antibody agonists for oncology, immunology, and inflammation targets.
In 2022, Boehringer Ingelheim and Mabgenesis collaborated to develop novel monoclonal antibodies for canine therapeutic treatments.
Market Concentration & Characteristics:
Merchant API suppliers, contract research organizations (CROs), and contract manufacturing organizations (CMOs) are key players in the pharmaceutical industry. Merchant API suppliers specialize in producing active pharmaceutical ingredients (APIs) for various pharmaceutical companies, providing flexibility and a diverse range of options. On the other hand, CROs play a vital role in the initial phases of API development by conducting research and optimizing production processes. Additionally, CMOs offer extensive manufacturing capabilities for APIs on a large scale, enabling pharmaceutical companies to outsource production without the necessity of maintaining in-house facilities. Together, these entities form a crucial ecosystem that supports the development and production of pharmaceutical products.
Report Coverage:
The research report offers an in-depth analysis based on Type, Product, Application, and Region. It details leading market players, providing an overview of their business, product offerings, investments, revenue streams, and key applications. Additionally, the report includes insights into the competitive environment, SWOT analysis, current market trends, as well as the primary drivers and constraints. Furthermore, it discusses various factors that have driven market expansion in recent years. The report also explores market dynamics, regulatory scenarios, and technological advancements that are shaping the industry. It assesses the impact of external factors and global economic changes on market growth. Lastly, it provides strategic recommendations for new entrants and established companies to navigate the complexities of the market.
Future Outlook:
- The market is expected to witness a surge in demand for biologics and biosimilars, complex drugs derived from living organisms. This trend is driven by factors like their effectiveness in treating chronic and complex diseases.
- Continuous manufacturing processes offer greater efficiency, reduced waste, and improved product quality. Increased adoption of these technologies is likely to streamline API production in the US.
- Concerns about supply chain disruptions and a desire for greater control over quality are expected to drive nearshoring (production in neighboring countries) and onshoring (domestic production) of APIs within the US.
- Pharmaceutical companies are increasingly relying on CMOs with expertise in API production. This trend allows them to focus on core competencies like drug discovery and development.
- Environmental concerns and regulations are pushing manufacturers to adopt eco-friendly practices throughout the API production lifecycle.
- AI and ML are poised to revolutionize the API market by optimizing processes, predicting production issues, and accelerating drug development timelines.
- The rise of personalized medicine, where treatments are tailored to individual needs, is expected to create demand for niche and customized APIs.
- Regulatory bodies will likely continue to implement stricter quality control measures to ensure the safety and efficacy of APIs used in US-manufactured drugs.
- Increased collaboration between the pharmaceutical industry and academic institutions is expected to accelerate innovation and discovery of new APIs.
- With rising healthcare costs, the focus will shift towards cost-effective APIs and value-based pricing models that link drug pricing to patient outcomes.
