Overview of This Study:

This study involved four major activities in estimating the current size of the Active Pharmaceutical Ingredient Market. Exhaustive secondary research was carried out to collect information on the market, its peer markets, and its parent market.

The next step was to validate these findings, assumptions, and sizing with industry experts across the value chain through primary research. Both top-down and bottom-up approaches were employed to estimate the complete market size. After that, market breakdown and data triangulation procedures were used to estimate the market size of segments and subsegments.

DRIVER: Adoption of organ on chip models in drug development

Despite massive investments in pharma R&D, there has been a direct decrease in the annual number of new FDA-approved drugs—almost directly proportional to the increase in R&D spending. To curb the high cost of drug development, there is a growing need to develop predictive tissue models using human cells to determine drug efficacy and safety in advance of clinical testing.

RESTRAINT: Unfavourable drug price control policy

Over the last few years, there has been a gradual increase in the regulation of pharmaceutical drug prices globally. The US is a major unregulated market; however, several prominent countries have regulated drug prices. Governments induce price controls to limit spending on pharmaceuticals. However, regulated drug prices mostly result in revenue losses to pharmaceutical companies. These revenue losses lead to a reduction in global R&D spending, which results in fewer new molecular entities (NMEs) being developed per annum.

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Geographical Growth Dynamics:

The global active pharmaceutical ingredients market is segmented into North America, Europe, Asia, Latin America, and Rest of the World. In 2019, North America accounted for the largest share of the active pharmaceutical ingredients market, followed by Europe and the Asia.

The large share of North America in the global market is attributed to the growing incidence of preventable chronic diseases, increasing government focus on generic drugs, rising demand for biologics and specialty drugs, and technological advancements in the manufacturing processes of APIs. However, the market in the Asia is expected to grow at the highest CAGR during the forecast period. This can be attributed to the low manufacturing costs, growth in the increase in disposable income, the high prevalence of lifestyle- and age-related diseases, and government efforts to reform healthcare industry.

Revenue Growth Expectations:

The global active pharmaceutical ingredient market size is projected to reach USD 248.3 billion by 2025 from USD 187.3 billion in 2020, at a CAGR of 5.8% during the forecast period.

Recent Developments:

# In 2020, Pfizer (US) signed a multiyear agreement with Gilead Sciences to manufacture and supply Gilead’s antiviral drug (Remdesivir) for the treatment of COVID-19.

# In 2020, Novartis (Switzerland) acquired Aspen’s Japanese operations to strengthen its position in the global generics and off-patent medicines market. Novartis also entered into a manufacturing and supply agreement with Aspen.

# In April 2020, Boehringer Ingelheim (Germany) acquired Northern Biologics, which focuses on therapeutic antibodies targeting the tumor microenvironment. This acquisition broadened Boehringer Ingelheim’s oncology product portfolio.

Global Leading Companies:

The global active pharmaceutical ingredients market is highly consolidated. Prominent players in the active pharmaceutical ingredients market include Pfizer Inc. (US), Novartis International AG (Switzerland), Merck & Co. (US), Teva Pharmaceutical Industries Ltd. (Israel), Mylan N.V. (US), Boehringer Ingelheim (Germany), F. Hoffmann-La Roche AG (Switzerland), Sanofi (France), AbbVie (US), Eli Lilly and Company (US), AstraZeneca (UK), Bristol-Myers Squibb (US), and GlaxoSmithKline plc (UK).

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COVID-19 impact on the active pharmaceutical ingredient market

With the WHO declaring the COVID-19 outbreak a pandemic, a mix of established pharmaceutical and biopharmaceutical companies, as well as small startups, have stepped forward to develop treatments that target the infection. In just a few weeks, scientists found a list of molecules that target COVID-19. Currently, around 155 molecules are under clinical investigation, and 45 molecules are under preclinical development to be targeted against COVID-19. In this list, there are four promising drugs (Remdesivir, Chloroquine & Hydroxychloroquine, Lopinavir & Ritonavir, and Lopinavir with Ritonavir plus Interferon beta-1a) that have been repurposed for use against COVID-19. On March 24, 2020, the WHO announced that it had initiated a global mega trial of the four most promising drugs against COVID-19.