According to a new market report published by Persistence Market Research “Active Pharmaceutical Ingredient (API) Market” the global active pharmaceutical ingredient market was valued at US$ 127 Bn in 2014 and is estimated to reach US$ 186 Bn by 2020 at a CAGR of 6.6% from 2015 to 2020.
Active pharmaceutical ingredient (API) refers to a therapeutically active ingredient or substance combination used in manufacturing a drug product. Production of active pharmaceutical ingredients is a highly sophisticated and technically demanding process. The global active pharmaceutical ingredient market is surging due to the increased demand for pharmaceutical drugs, which in turn is driven by aging population, increasing prevalence of chronic diseases such as cancer, diabetes, cardiovascular, neurological and infectious diseases among others. Further, fragmented nature of the pharmaceutical supplies market, brings a smaller profit share to each player.
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The global active pharmaceutical ingredient market encompasses geographies such as North America, Asia Pacific, Europe and Rest of the World. North America accounted for the largest segment in the global active pharmaceutical ingredients market in 2014 due to fact that North America is the leading consumer of APIs and API exporters consider North America as the most lucrative market. India and China are the major suppliers of APIs to North America due to low production and labor costs. Moreover, biologics have become one of the top-selling drugs in North America. Thus, the expected market entry of biosimilars with flexible regulatory process would boost the API market in North America. The API market in the U.S. displays high level of competition, with mergers and collaborations between various key players such as Teva Pharmaceutical Industries Ltd., Sandoz (Novartis AG), Mylan, Inc., and Allergen plc.
Additionally, demand for biological APIs is high in the region, as technological developments in the pharmaceutical industry are paving the way for newer biotechnology drugs. These expansion strategies intensify the competition between the global players, which is a result of expected high growth in the API market.
Asia Pacific ranks second due to the factors such as availability of low cost production facilities and cheap labor in countries such as India and China. The cost difference ranges from 30% to 60% if the drugs are manufactured in China or India compared to other countries. Hence, China and India are expected to witness significant growth in the near future due to increase in production capacities and presence of large number of global and domestic players… Thus, Asia-Pacific is the most competitive market in API and the competition is expected to intensify between India and China, as these are the most attractive destinations for pharmaceutical manufacturing.
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In Europe pharmacists are offered incentives for substituting branded drugs with generic versions, which contributes to the growth of the API market in the region. Regulations also play a vital role in the API market, as the law disallows development of generic APIs in Europe until patent expiry. However, the governments of various countries in Europe have started supporting the manufacture of generic drugs post the financial crisis. Patent expirations of major blockbuster drugs in Europe during the forecast period would fuel the growth of the API market in the near future.
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