Article — February 2024

Overview of the Active

Pharmaceutical Ingredient Market
IQVIA Chemical Intelligence
CHANDANA D, Global Data Associate, Chemical Intelligence, IQVIA

Introduction — The Active

Pharmaceutical Ingredient market
The Active Pharmaceutical Ingredient (API) is the
vital, biologically active compound in pharmaceutical
products driving therapeutic effects. Whether
chemically synthesized or sourced from nature, APIs
play a pivotal role globally in the pharmaceutical
supply chain, serving as the foundation for
drug development and manufacturing. As the
pharmaceutical industry evolves towards cutting-edge
therapeutics and innovative delivery systems, the
demand for sophisticated APIs is likely to increase.1

Global molecule market: A surge

in value and growth over the years
(2014–MAT 2023)
The molecule market has shown consistent growth, with trajectory of the global molecule market driven by
key players implementing strategies to maintain this diverse factors. This reflects a substantial and enduring
momentum. Based on IQVIA’s MIDAS data, the observed uptrend, evident in the compound annual growth rates
statistical growth highlights the ongoing upward (CAGR) during the periods from 2014 to MAT 2023.2

Figure 1: Global molecule market growth2

1.62
1.53
1.48
1.35
1.30
1.25
Trillions $

1.20
1.14
1.08 1.08

2014 2015 2016 2017 2018 2019 2020 2021 2022 MAT
2023

Source: IQVIA MIDAS

1
Drivers of API market expansion Logistical and regulatory challenges:
The API market is driven by diverse factors, The pandemic’s impact on the
including capacity expansions in pharmaceutical API market
and biopharmaceutical sectors, increased reliance
The API market encountered significant challenges
on generics and medical expertise1, technological
during the recent global health crisis. Disruptions
advancements in API manufacturing, and the aging
in worldwide supply chains and logistical hurdles,
global population. 3 The growing incidence of chronic including transportation restrictions and delays,
diseases, such as cardiovascular conditions and cancer, impeded the timely acquisition of raw materials and
amplifies the momentum of market expansion.4 the distribution of finished dosage forms. Moreover,
stringent regulatory measures and increased scrutiny
1. Scaling production capacities
of the pharmaceutical supply chain introduced
A s manufacturing capabilities expand, it enables complexities, resulting in delays in production and
companies to meet growing demand, introduce approval processes. These collective challenges not
new products, and stay abreast of technological only impacted production capacity but also highlighted
advancements, thereby contributing to the overall the need for resilience and adaptability in the API
development and sustainability of the API market. 5
market, but there are vulnerabilities due to the
regional dominance and lack of global spread.5
2. Technological advancements
Progress in drug discovery, development, and Vulnerability factors affecting
clinical innovations accelerates API market growth.
supply chain
These technological strides contribute to the
efficient manufacturing of novel therapeutic drugs 1. I nsufficient global manufacturing capacity
utilizing APIs as essential raw materials.6 In the first decade of the 21st century, there
was a significant decline in global manufacturing
3. Generics and therapeutics demand capacity, leading to the loss of one-third of jobs and
An escalating global chronic disease burden drives adversely affecting small and medium enterprises
pharmaceutical production, increasing the need (SMEs). This decline is attributed to several factors,
for APIs. Generic drugs, equivalent in efficacy to including competition from low-wage nations, with
brand-name counterparts but cost-effective, approximately 25% of job losses linked to the rise
of China following its entry into the World Trade
witness high demand, particularly in the treatment
Organization. Concurrently, stagnant productivity
of chronic ailments.6
growth in the U.S compared to peers characterize
4. Geriatric population impact the challenges, with SMEs globally underinvesting in
The expanding global geriatric demographic acts new technology.8
as a significant driver for the API market. The rise
2. Incentive misalignment and short-term focus
in age-related health issues contributes to elevated
in private markets
demand for pharmaceuticals, influencing API
The Department of Health and Human Services
market growth.6
highlights the market’s failure to reward quality,

5. Global health crisis impact impacting drug shortages. Lower-wage choices

boost earnings but embracing sustainable strategies
The recent pandemic elevated the pharmaceutical
can enhance wages without profit compromise,
sector’s importance, resulting in market
while income distributions to shareholders restrict
expansion. Well-known pharmaceutical companies,
crucial allocations for research, development, and
biopharmaceutical businesses, and startups
production. Investments in enhancing capabilities
responded to the outbreak by intensifying efforts
for continuous improvement or reducing lead
in vaccine discovery and development, further time involve initial costs but result in enhanced
impacting the API market positively.7 performance during both regular and crisis periods.8

2
3. C
 oncentration of Global Sourcing In IQVIA Chemical Intelligence (CI) API
Global supply chain resilience necessitates manufacturers list, 50% originate from India and
integration, but the pursuit of cost-effective China. This reflects the above predominance of
production and strategic industrial policies has led API manufacturing, allowing CI customers to make
to concentrated supply chain locations, exposing informed decisions conveniently.
producers to vulnerabilities. India and China
8

emerge as unrivaled giants in API manufacturing,

collectively shaping the landscape of the API
India and China emerge
market. Their robust capabilities and significant as unrivaled giants in API
contributions emphasize their dominance, manufacturing, collectively shaping
reinforcing their pivotal roles in the global
pharmaceutical supply chain. The Department
the landscape of the API market.
of Health and Human Services highlights fierce
competition between India and China for U.S
Rising trend in outsourcing
medicine market share, with India relying on China
for nearly 70% of its APIs.8
manufacturing facilities in the
pharmaceutical industry
Furthermore, in a strategic initiative, for example
the Indian government has launched the production Over the past two decades, the pharmaceutical

of 35 different APIs under a production-linked supply chain has evolved, witnessing increased

scheme for the pharmaceutical sector. Addressing complexity and fragmentation as companies turn to

disruptions caused by the pandemic, these APIs, overseas production and contract manufacturers.5

which were previously 90% import-dependent, The outsourcing of API manufacturing has become

are now being manufactured across 32 different prevalent, with major industry players, opting to

plants in India. This marks a significant growth source a significant portion of their manufacturing

phase in the API market, with sustained momentum activities to leverage economies of scale and

anticipated in the coming years.9 cost advantages. This trend extends to emerging
biopharmaceutical and virtual pharmaceutical firms
relying heavily on outsourcing providers.10

Figure 2: API manufacturing facilities by region (2018) 5 India and China emerge prominently as pivotal
players, providing growth prospects with their cost-
effective API production capabilities. The substantial
14%
cost differentials, along with lenient environmental
regulations, create a favorable environment for scaling
up production and enhancing efficiency in these
markets. API manufacturing costs are 30–35% lower
in India and 35–40% lower in China compared to the
United States (U.S), making them attractive alternatives.
55%
These countries possess additional advantages such as
31%
cost-effective labor, robust testing capabilities, ample
research opportunities, and favorable regulatory audits,
further enhancing their competitive edge in developing
markets and offer opportunities for the industry
to capitalize on scaling up production, improving
productivity, and enhancing efficiency.11

China India Rest of World

Source: https://www.fda.gov/media/131130/download?attachment
3
Comprehending supply Shaping global markets:
disruptions and shortages in A comprehensive insight into the top
the pharmaceutical market 5 companies leading in India, China,
Temporary market imbalances, known as supply and rest of the world
disruptions, occur when the demand for a product
Extracting insights from IQVIA’s MIDAS data for
surpasses its supply. Root causes, often accompanied 2023, the top 5 companies by revenue emerge as
by contributing factors, trigger these disruptions. industry leaders in India, China, and rest of the world,
Challenges such as the lack of financial incentives to contributing 10%, 27%, and 24% to the total revenue of
market or scale up production for less profitable drugs their respective regions. These companies collectively
can hinder supply increases. While not all disruptions represent 22% of the global top 5 companies’ revenue.
lead to shortages, most shortages follow supply The top companies significantly contribute to the
disruptions. If a disruption persists, it transforms market size, playing pivotal roles in shaping and
into a drug shortage, characterized by an extended influencing the industry’s overall dynamics. Their
period during which suppliers struggle to meet prominent contributions extend beyond revenue figures,
demand. Eventually, through increased production or encompassing factors such as technological innovation,
decreased demand, the shortage is resolved, ensuring market presence, and strategic initiatives that further
widespread availability of the drug. 5 bolster their impact on the global market size.2

Global distribution of molecule

Figure 4: Revenue market share of top 5 companies vs
market size by country others (2023)2
According to IQVIA’s MIDAS data from the last five
years, the global molecule market size is segmented
among India, China, and the rest of the world. From
2018 to 2023 China accounts for a 7–8% share, while 73% 76% 78%
India holds 3%, and the rest of the world contributes 90%
89–90%. Significantly, India and China play a pivotal
role in shaping the market size, emerging as key
contributors to the global molecule market’s growth.
27% 24% 22%
Their substantial shares emphasize their significance 10%
in influencing the overall market dynamics. In essence, China India Rest of World Gobal
China and India stand out as dominant forces, exerting
Top 5 companies Rest of the companies
significant influence in the continuous expansion of the
Source: IQVIA MIDAS
global molecule market.2

Figure 3: Global molecule market size2

100%
90% 89% 90% 89% 90% 90%
90%
80%
70%
60%
50%
40%
30%
20%
10% 7% 8% 8% 8% 7% 7%
3% 3% 3% 3% 3% 3%
0%
2018 2019 2020 2021 2022 MAT*
2023
China India Rest of World
Source: IQVIA MIDAS
4
 identify potential buyers for their intermediates. These
Conclusion
intermediates can be further utilized by buyers in
Recognizing the significance of the API market the manufacturing of APIs. The Synthesis Pathways
within the global chemical supply chain, IQVIA module encompasses 84.4K synthetic routes and are
Chemical Intelligence provides comprehensive associated with 8.9K intermediate users spanning
API manufacturers data worldwide. This valuable across more than 101 countries.
information is accessible through the Directory of
Producers module, serving as an extensive resource Additionally, competitors can leverage the platform to

that facilitates connections between producers and explore outsourcing opportunities and identify active

buyers of API raw materials, specialty chemicals, and buyers globally, fostering a thorough understanding

bulk pharmaceuticals across more than 82 countries. of the competitive landscape. The featured API

By utilizing this module, customers can proactively manufacturers in the Directory of Producers and

engage with API manufacturers, streamlining their Synthesis Pathways modules are associated with

sourcing processes. The Directory of Producers diverse regulatory and government certifications, such

module encompasses a vast portfolio of 7.7K+ APIs as ISO, GMP, and REACH certificates, providing essential

and 4.2K+ associated manufacturers, each holding information for the regulation of API manufacturing

certifications that contribute to their credibility and activities in major countries. This valuable resource

adherence to industry standards. equips customers with reliable data, enabling informed
decision-making for their business endeavors.
Likewise, the Synthesis Pathways module serves as
a comprehensive resource, offering insights into the
synthetic routes of APIs by providing information on
intermediate users. This module facilitates connections
between intermediate manufacturers, helping them

References

1. https://www.thebusinessresearchcompany.com/report/pharmaceutical-api-manufacturing-global-
market-report

2. IQVIA’s MIDAS Quarterly Data

3. https://www.marketsandmarkets.com/Market-Reports/API-Market-263.html

4. Active Pharmaceutical Ingredients Market Size Report, 2030 (grandviewresearch.com)

5. https://www.fda.gov/media/131130/download?attachment

6. https://blog.marketresearch.com/active-pharmaceutical-ingredients-api-market-to-reach-258.6-billion-
by-2027

7. https://www.insightaceanalytic.com/report/active-pharmaceutical-ingredients-market/1768

8. https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf

9. https://www.mordorintelligence.com/industry-reports/global-active-pharmaceutical-ingredients-api-
market

10. https://www.technavio.com/report/active-pharmaceutical-ingredients-market-industry-
analysis#:~:text=The%20Active%20Pharmaceutical%20Ingredients%20(API,players%20in%20the%20
pharmaceutical%20industry.

11. https://www.outsourcedpharma.com/doc/emerging-market-trends-for-apis-0001

5
Author
CHANDANA D
Global Data Associate,
Chemical Intelligence,
IQVIA

Chandana is a Global Data Associate at Chemical Intelligence. She brings extensive expertise in
pharmaceutical data research and content development. Her educational background includes a Master of Science
degree in Microbiology and a Bachelor of Science degree in Chemistry, Microbiology, and Biotechnology from the
Bengaluru Central University.

IQVIA Chemical Intelligence is a leading information provider to purchasers, sellers, and researchers in
the Pharmaceutical and Chemical industries worldwide. To find out more, please click here.

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