Looking forward to 2020, the report, published by Persistence Market Research, predicts the global API market to reach $185bn, with North America remaining the largest market – currently representing a revenue share of 35%.
Asia Pacific is the second-largest market due to its low cost production facilities and population, which is largely geriatric. In generally, a growing geriatric population globally is driving API demand, in addition to an increasing number of lifestyle related diseases.
Specifically, cardiovascular drugs are the largest segment – with a revenue share of 24% in 2015; however, oncology is expected to see the highest year-over-year growth in 2016 over 2015.
“Bulk manufacturing of the APIs has now become high-volume business with a very low profit margin,” Sakshi Goel, Senior Consultant at Persistence Market Research, told us. “Usually the API manufacturing companies earn less than 10% profit margin, however several companies in Asia, particularly in China and India operate on 3% profit margin.”
Demand for low cost medicines and increasing number of ANDA filings are fueling growth of the global active pharmaceutical ingredients market.
Demand is particularity high in low- and middle-income countries in the Asia Pacific, Africa and Latin America. “This increased demand fueled the surge of API manufacturers, as pharmaceutical drug manufacturers do not have enough in-house capacity to meet the enormous market demand,” said Goel.
With this increased demand, several API manufacturers have come under scrutiny lately for quality systems and data issues. As In-PharmaTechnologist.com previously reported, drug inspections in China have been increasing as the agency has made a concerted effect to increase its presence in the country.
Consequently, as more companies have begun to bring API capabilities in-house in order to better manage quality and techniques as they pertain to niche APIs, the market size for in-house manufacturing is estimated to be almost double the size of the API contract manufacturing market during 2016.
“The captive or in-house API manufacturing segment, once dominated by Europe, is steadily shifting toward Asia Pacific where low cost of manufacturing as well as demand from generic manufacturers is huge,” added Goel.
Currently, more than 70% of the APIs available in the market constitute synthetic chemical APIs; “Although the top-selling drugs constitute biologics, the number of these drugs is quite small as compared to the small molecule drugs,” said Goel.
However, while the synthetic chemical API segment accounted for a higher market revenue share in 2015, biological API is expected see a higher year-over-year growth in 2016. “Furthermore, major pharmaceutical companies are preferring biological API segment,” explained Goel.
Additionally, the overall drug development costs for biologics is less as compared to chemical APIs, “primarily because of low failure rates in the pipeline phase,” said Goel. “This factor has attracted higher investments in the biologics and biosimilars market.”