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The global pharmaceutical industry has witnessed a trend of API outsourcing from regulated markets (developed countries) to lesser regulated markets (developing countries) due to lower costs. Geographically, the global API production has already shifted towards Asia Pacific and the competition for increasing market shares is becoming fierce particularly between China and India. Although most of the companies continue to outsource the API production to manufacturers in Asia, they are now revisiting their strategies due to safety concerns. Regulations such as the U.S. Drug Quality and Security Act in the U.S. and the Falsified Medicines Directive are increasing the cost of production for Asian manufacturers as they have to comply with constantly changing and complex nature of these regulations along with increased documentation process and supply chain management issues. This factor has led to a slight decrease in the growth rate of overall API market in Asia Pacific.
Geographically, the global active pharmaceutical ingredients market has been segmented into four major regions: North America, Europe, Asia Pacific and Rest of the World. North America dominated the overall active pharmaceutical ingredients market in 2013, accounting for majority share (35%) in the market. The API market in this region continues to grow due to increasing awareness about and efforts taken for uptake of generic medicines, as well rise in the number of FDA approvals for innovative or first-in-class drugs. The recent approval of the first biosimilar in the U.S. is expected to explode a whole new market opportunity for niche players operating in the biological API market, particularly for companies such as Novartis with a long presence in the market.
The Asia Pacific active pharmaceutical ingredients market is expected to record the highest growth rate during the forecast period from 2014 to 2020. The increasing market share of Asia Pacific is attributed to the low cost production facilities in the region along with several other factors such as large market size, governments offering tax incentives for manufacturing, availability of cheap labor, and increasing commoditization of the API market. Next to Asia Pacific, the Rest of the World API market is emerging at a faster pace than North America and Europe owing to cost-effective manufacturing, large unmet demand for pharmaceuticals, increasing healthcare infrastructure and ever increasing necessity of generic medicines in the region. Increasing number of API manufacturers in the Asian market coupled with companies from North America and Europe investing heavily in China and India, will favor growth of the overall API market. API manufacturing companies in India have filed more than 400 Drug Master Files (DMFs) with the U.S. FDA in 2012 alone. Sun Pharmaceutical Industries, Dr. Reddy’s Laboratories, Cipla, Ranbaxy and Aurobindo Pharma are some of the major DMF applicant companies from India. Most of these companies are also leading in filing ANDAs in the U.S. market ensuring that they will produce formulations as well, and thus reduce dependency on clients for purchasing APIs, at least for certain high value APIs.
Although, a shift in the API manufacturing landscape has been evident over the years, a variety of challenges has been revealed in sourcing APIs from emerging markets. Moreover, since the advent of EU directives 2004/27 and 2004/28, and the recent adoption of EU’s Falsified Medicines Directive, there has been a shortage of APIs due to less number of GMP-compliant manufacturing plants identified in Asia, particularly in China and India. This has steered the revival of competitor companies in Europe, and is expected to impact the level of APIs imported from Asia Pacific. Although European formulation companies will continue to rely on companies in China and India for their API requirement, the level of imports is expected to decline during the forecast period from 2014 to 2020 as companies in the region build their in-house capacities to meet quality concerns.
Major companies in the global active pharmaceutical ingredients market include Boehringer Ingelheim Group, Cambrex Corporation, Dr. Reddy’s Laboratories, Ltd., BASF SE, Hospira, Inc., Lonza Group, Mylan, Inc., Novartis AG, Pfizer, Inc., Teva Pharmaceutical Industries Ltd., Actavis plc, and Wuxi Apptec.
The global active pharmaceutical ingredients market is segmented into the following categories:
Active Pharmaceutical Ingredients Market, by Type of Manufacturing
- Captive or In-house API manufacturing
- API contract manufacturing
- Active Pharmaceutical Ingredients Market, by Type of API
- Synthetic Chemical API
- Biological API
- Branded or Innovative Prescription Drugs
- Generic Prescription Drugs
- Over-the-counter Drugs
- Non-steroidal Anti-inflammatory Drugs (NSAIDs)
- Oncology Drugs
- Anti-diabetic Drugs
- Cardiovascular Drugs
- Central Nervous System Drugs
- Musculoskeletal Drugs
- Other Drugs (antibacterial, antiviral, antifungal, etc.)
- North America
- Asia Pacific
- Rest of the World (RoW)
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