February 29, 2024
Active Pharmaceutical Ingredients Market

Active Pharmaceutical Ingredients Market: Growing Demand for Generic Drugs Driving Market Growth

The global Active Pharmaceutical Ingredients (API) market is estimated to be valued at US$ 235 billion in the year 2023 and is expected to exhibit a CAGR of 6.8% over the forecast period of 2023-2030, according to a new report published by Coherent Market Insights.

Market Overview:

APIs are the chemical compounds used in the production of pharmaceutical drugs. They are the active components responsible for the therapeutic effects of the drugs. The API market is driven by the growing demand for generic drugs, as they offer cost-effective alternatives to brand-name drugs. The need for affordable healthcare options, especially in developing regions, is fueling the demand for generic drugs, thereby driving the growth of the API market. Additionally, the increasing prevalence of chronic diseases and the rise in the geriatric population are further contributing to the market growth.

Market Key Trends:

One key trend in the API market is the increasing adoption of biopharmaceuticals. Biopharmaceuticals, also known as biologics, are drugs produced using living organisms or their derivatives. They have revolutionized the treatment of many diseases, including cancer, autoimmune disorders, and rare genetic diseases. The market for biopharmaceuticals is expected to witness significant growth in the coming years, driven by advancements in biotechnology and the development of innovative therapies. The API market is adapting to this trend by expanding its capabilities in biologics manufacturing and investing in research and development in this field. This trend presents lucrative opportunities for API manufacturers to cater to the growing demand for biopharmaceuticals.

Porter’s Analysis:

Threat of New Entrants: The threat of new entrants in the active pharmaceutical ingredients market is low. This is because the industry requires significant investment in research and development, manufacturing facilities, and regulatory compliance. Additionally, existing players benefit from economies of scale and strong relationships with suppliers and customers.

Bargaining Power of Buyers: The bargaining power of buyers in the active pharmaceutical ingredients market is moderate. Buyers include pharmaceutical companies and contract manufacturers who need a reliable supply of high-quality ingredients. While they have some power to negotiate prices and terms, the limited number of suppliers and the critical nature of the products give suppliers some leverage.

Bargaining Power of Suppliers: The bargaining power of suppliers in the active pharmaceutical ingredients market is moderate. Suppliers consist of raw material providers, chemical manufacturers, and API manufacturers. These suppliers have some power to negotiate prices and terms, especially if they offer unique or patented ingredients. However, strong competition among suppliers and the importance of quality and reliability give buyers a degree of leverage.

Threat of New Substitutes: The threat of new substitutes in the active pharmaceutical ingredients market is low. API manufacturers produce essential ingredients that are necessary for the production of pharmaceutical drugs. As long as these drugs remain the mainstay of medical treatment, there are limited substitutes that can adequately serve this purpose.

Competitive Rivalry: The competitive rivalry in the active pharmaceutical ingredients market is high. There are numerous global and regional players competing for market share. These companies invest heavily in research and development, manufacturing capabilities, and marketing efforts to gain a competitive edge. Additionally, regulatory requirements and the need for compliance further intensify the competition.

Key Takeaways:

The global active pharmaceutical ingredients market is expected to witness high growth, exhibiting a CAGR of 6.8% over the forecast period. This growth can be attributed to increasing healthcare expenditures, the growing prevalence of chronic diseases, and the demand for affordable generic drugs. Additionally, the outsourcing of API manufacturing to emerging economies with low labor costs is further driving market growth.

In terms of regional analysis, North America is expected to be the fastest-growing and dominating region in the active pharmaceutical ingredients market. This can be attributed to the presence of major pharmaceutical companies, favorable government regulations, and increasing investments in drug development. Europe and Asia Pacific are also significant markets due to the growing demand for generic drugs and the establishment of manufacturing facilities in these regions.

Key players operating in the active pharmaceutical ingredients market include Teva Pharmaceutical Industries Ltd., Pfizer, Inc., Dr. Reddy’s Laboratories Ltd., Novartis AG, and Mylan N.V. These companies have a strong global presence, extensive product portfolios, and strategic partnerships to expand their market share. Other key players in the market include Amneal Pharmaceuticals LLC, Lonza Group, Lupin Limited, Fresenius Kabi, and Hikma Pharmaceuticals. These players are focusing on research and development activities, acquisitions, and collaborations to strengthen their market position.

In conclusion, the global active pharmaceutical ingredients market is poised for significant growth, driven by factors such as increasing healthcare expenditures and the demand for affordable generic drugs. North America is expected to lead the market, with key players such as Teva Pharmaceutical Industries and Pfizer holding a strong presence. However, the market is highly competitive, and companies must continue to invest in research and development and strategic partnerships to maintain their competitive edge.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it