The global Active Pharmaceutical Ingredient (API) market is estimated to be valued at USD 206.0 billion in 2021 and is expected to exhibit a CAGR of 6.8% over the forecast period 2021-2028, according to a new report by Coherent Market Insights. The market is driven by the increasing prevalence of chronic diseases, the growing demand for generic drugs, and the rising investment in research and development (R&D) activities.

A) Market Overview:

The API market refers to the production and sale of the active chemical components used in the manufacturing of pharmaceutical drugs. APIs are essential for the therapeutic effect of drugs and are responsible for the desired biological activity. They are manufactured through various processes, including chemical synthesis, fermentation, and biotechnology. APIs are then used by pharmaceutical companies to produce finished dosage forms, such as tablets, capsules, and injections. The market is witnessing significant growth due to the increasing demand for effective and affordable healthcare solutions.

B) Market Dynamics:

The API market is driven by two main factors – the rising R&D activities and the growing demand for generic drugs. Increasing investment in R&D activities by pharmaceutical companies and research organizations is fueling the development of new and innovative drugs, thereby driving the demand for APIs. Additionally, the rising prevalence of chronic diseases, such as cardiovascular diseases, cancer, and diabetes, is increasing the demand for generic drugs, which in turn is driving the growth of the API market.

For example, Teva Pharmaceutical Industries Ltd., one of the key players in the API market, invested USD 1.5 billion in R&D activities in 2020. This investment enabled the company to develop new and improved APIs, enhancing its product portfolio and market presence. Similarly, Pfizer, Inc. has been actively involved in R&D activities to develop APIs for various therapeutic areas, including oncology, cardiovascular diseases, and infectious diseases.

C) Segment Analysis:

The Active Pharmaceutical Ingredient (API) Market can be segmented based on type, synthesis, and therapeutic area. Based on type, the market can be categorized into synthetic APIs and biological APIs. Synthetic APIs dominate the market, as they are easier to produce and have a wider range of applications. However, biological APIs are gaining popularity due to their efficacy and lower side effects.

Based on synthesis, the market can be divided into chemical synthesis and biotechnological synthesis. Chemical synthesis is the most common method used for API production, as it is cost-effective and allows for large-scale manufacturing. Biotechnological synthesis is gaining traction due to its ability to produce complex molecules and enhanced therapeutic efficacy.

D) PEST Analysis:

- Political: The pharmaceutical industry is highly regulated, and the policies and regulations imposed by governments can impact the API market. For example, government policies promoting the use of locally manufactured APIs can boost domestic production and reduce dependence on imports.

- Economic: Economic factors, such as GDP growth, healthcare expenditure, and affordability of drugs, influence the demand for APIs. The increasing healthcare expenditure in emerging economies is driving the demand for APIs in these regions.

- Social: The rising prevalence of chronic diseases, aging population, and increasing access to healthcare services are the key social factors driving the growth of the API market.

- Technological: Advancements in technology, such as automation, artificial intelligence, and the use of big data analytics, are improving the efficiency of API manufacturing and quality control processes.

E) Key Takeaways:

- The global API market is expected to witness high growth, exhibiting a CAGR of 6.8% over the forecast period, due to increasing R&D activities and the growing demand for generic drugs.

- The Asia-Pacific region is expected to be the fastest-growing and dominating region in the API market. This can be attributed to the presence of a large patient population, increasing healthcare expenditure, and the thriving pharmaceutical industry in countries like China and India.

- Key players operating in the global API market include Teva Pharmaceutical Industries Ltd., Pfizer, Inc., Dr. Reddy’s Laboratories Ltd., Novartis AG, Mylan N.V., and others. These players are focusing on strategic partnerships, acquisitions, and product launches to strengthen their market position.