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.

Market Size Estimation:

Both top-down and bottom-up approaches were used to estimate and validate the total size of the active pharmaceutical ingredients market. These methods were also used extensively to estimate the size of various subsegments in the market. The research methodology used to estimate the market size includes the following:

# The key players in the industry and market have been identified through extensive secondary research
# The revenues generated from the active pharmaceutical ingredients business of leading players have been determined through primary and secondary research
# All percentage shares, splits, and breakdowns have been determined using secondary sources and verified through primary sources

Data Triangulation:

After arriving at the overall market size from the market size estimation process, the total market was split into several segments and subsegments. To complete the overall market engineering process and arrive at the exact statistics for all segments and subsegments, data triangulation and market breakdown procedures were employed, wherever applicable. The data was triangulated by studying various factors and trends from both the demand and supply sides.

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Research Methodologies Followed for This Study:

Primary Research:

In-depth interviews were conducted with various primary respondents, including key industry participants, subject-matter experts (SMEs), C-level executives of key market players, and industry consultants, among other experts, to obtain and verify the critical qualitative and quantitative information as well as assess future prospects of the market. Various primary sources from both the supply and demand sides of the market were interviewed to obtain qualitative and quantitative information.

Secondary Research:

Secondary research was used mainly to identify and collect information for the extensive, technical, market-oriented, and commercial study of the active pharmaceutical ingredients market. The secondary sources used for this study include Active Pharmaceutical Ingredients Committee (APIC), International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), International Pharmaceutical, Congress Advisory Association (IPCAA), European Generic and Biosimilar Medicines Association (EGBMA) and World Health Organization (WHO). These sources were also used to obtain key information about major players, market classification, and segmentation according to industry trends, regional/country-level markets, market developments, and technology perspectives.

Projected Surge in Revenue Generation:

The global active pharmaceutical ingredients 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.

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.

In this regard, the organ-on-a-chip technology is expected to fill the gaps in drug screening by offering predictive human tissue models. This technology has the potential to revolutionize the pharmaceutical industry by making drug development faster, cheaper, and successful. Thus, the adoption of organ-on-chip models in drug development is considered as a positive indicator of the growth of the APIs market.

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.

Such price control policies that reduce pharmaceutical revenues may provide modest relief to individual purchasers; however, they pose risks to long-term innovation in the pharmaceutical industry. For instance, the National Pharmaceutical Pricing Authority (NPPA) of India enforced the Drugs Price Control Order (DPCO) Act in 2013, which empowered it to fix a ceiling on the retail price of drugs. Since then, the list of drugs under price control has steadily expanded from 74 in 1995 to nearly 860 by 2019.

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OPPORTUNITY: Highly potent active pharmaceutical ingredients

Highly potent active pharmaceutical ingredients (HPAPIs) represent a significant change in the way pharmaceutical companies are using small molecules to deliver new therapies. The shift toward HPAPIs has led to the development of a pipeline of more effective medicines that require lower doses. The benefits of HPAPIs, such as their high efficacy, lower therapeutic dose requirement (owing to the selective mode of action), and the ability to bind to specific receptors, can be considered as the major factors responsible for their growing demand among manufacturers as well as customers.

The presence of small molecules has traditionally dominated the APIs market. As the generic APIs market continues to get highly competitive, API manufacturers are shifting toward newer avenues such as HPAPIs to differentiate themselves from the competition.