All drugs are composed of two primary components, the Active Pharmaceutical Ingredient (API) which is the main ingredient, and the excipients that enable the drug to deliver the medicinal effect to the system. Lactose or Mineral oil are termed as excipients that tend to be chemically inactive elements. WHO – World Health Organization describes “API as a bio-logically active element used to formulate the FPP (Finished Pharmaceutical Product) aiming to have a direct influence on the examination, cure, and prevention of diseases”.
Thus, API is a pharmaceutical ingredient comprising a drug that generates the required effect. Certain drugs having combined therapeutic effects tend to treat various symptoms in differing ways. The manufacturing of APIs has been conventionally done by the pharmaceutical companies in their home nations. But in recent times, many companies have outsourced manufacturing to cut on expenditures. Consequently, leading to stringent guidelines, examinations, and considerable changes in drug regulations.
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GLOBAL MARKET TRENDS OF API
The market share for API’s across the globe is estimated to climb at 248.3 US billion dollars by the year 2025 from 187.3 US billion dollars, at a compounded annual growth rate (CAGR) of 5.8 percent. The growth in the market is facilitated by increasing drug research & development, rising cases of chronic disease, and the towering uptake of biopharmaceuticals. Conversely, unreasonable drug policies across different nations, high production costs, and strict regulations are anticipated to limit market growth. Based on the manufacturer type, the API market has been classified as ‘Merchant’ and ‘Captive’ API. The latter accounted for the largest market share in the year 2019 due to easy access to raw materials and increased capitalization of key players for the development of high-end production facilities.
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While the Merchant API is forecasted to be the quickest growing market segment between the years 2020 to 2027. The primary drivers for the same are increased cost of in-house production and rising popularity for bio-pharmaceuticals. The market is further distinguished on the type i.e., Innovative and Generic API. Innovative APIs exhibited a market monopoly in the year 2019 due to the existence of favourable government policies, established R & D units, and an increase in novel drug development. Considering the several innovative products queued up, the same is expected to be introduced in the coming years. While the expiry of patents is one of the key drivers in the generic API market.
By application, APIs have pharmacological indications in the domains of cardiology, oncology, CNS and neurology, pulmonology, gastroenterology, ophthalmology, nephrology, and endocrinology.
Cardiology displayed market monopoly in the year 2019 considering the increasing prevalence of cardiac diseases globally. As per WHO, deaths related to cardio-vascular ailments accounted for approximately 17.9 million deaths annually across the globe. Oncology is foreseen to be the quickest-growing segment due to increasing cases of cancer and lifestyle diseases. There are several APIs in the cancer treatment market such as Trastuzumab, Bevacizumab, Imatinib by Novartis, and Rituximab by Roche. Geographically, North America dominated the market until the year 2019.
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The reason being a rise in the number of cancer patients and other life-style ailments facilitating Research & Development initiatives. The Asia Pacific is foreseen to be the quickest-growing market by the year 2027. India and China are considered as potential markets due to the availability of cheap labour; due to which many companies are setting up API production plants. Some of the key global brands in the API market are Merck & Co., Mylan. N.V., AbbVie, Eli Lilly and Company, Bristol-Myers Squibb, Pfizer – (United States), Astra Zeneca, GlaxoSmithKline plc – (United Kingdom), Novartis, Hoffman-La Roche (Switzerland), Sanofi – (France), Boehringer Ingelheim (Germany), and Teva Pharmaceuticals (Israel).
INDIAN MARKET FOR API
In the year 2019, the API market of India accounted for 725 billion INR (Indian Rupees) and has witnessed a steady growth since the year 2016. Based on the estimates, the Indian API market size is expected to rise by 9 percent in the periodic tenure of 2020 to 2024.
The Government of India (GOI) sanctioned a budget of 1.2 billion US dollars for the pharmaceutical sector to shift the nation’s dependence from the APIs manufactured in China. As the Indian pharmaceutical sector is presently China-reliant for several APIs. The ongoing outbreak of the Covid-19 pandemic has disrupted the API production in China, thus affecting the global supply. Consequently, GOI has put forth an order to limit the export of particular APIs. Currently, India’s contribution to the global generic market is around 20 percent of the generic market across the globe. Some of the prominent brands in the Indian API market are Aurobindo Pharma, Biocon, Dr. Reddy’s Laboratories, Cipla, and Sun Pharmaceuticals.
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API manufacturing is a profitable opportunity for Indian pharmaceutical companies to limit the dependence on China for the import of the same.
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Thus, reduced dependency on China and other nations not just for economic progress, but for better quality control and market growth on the homeland.
NPCS is one of the renowned brands in the industrial world providing consolidated technical consulting services. Having explored the market for ‘Active Pharmaceutical Products’, production of the same would be a promising venture!
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