Pharmaceutical active ingredients (APIs) are substances or active ingredients that have a favorable impact on a patient’s health and treat a particular ailment or disease. A number of APIs, such as those found in combination therapy, may each operate differently or treat a variety of symptoms. As a result, APIs play a crucial role in the production of drugs and therapies in the pharmaceutical and biopharmaceutical sectors.

Due to its analgesic and antipyretic properties, paracetamol, also known as acetaminophen, is one of the most often prescribed drugs for the treatment of mild to moderate pain and fever. It is a crucial ingredient in many prescription analgesics and antiviral drugs, and because fever and pain are so common in the world’s population, its demand is rising. For instance, according to an analysis by Mordor Intelligence and a study published in the BMC journal, the incidence of active headache condition is thought to be over 52% worldwide. In the pharmaceutical sector, acetaminophen API demand is rising.

How Fast Is the Global API Market Growing?

According to the latest report by Mordor Intelligence, titled Active Pharmaceutical Ingredients (APIs) Market – Growth, Trends, COVID-19, And Forecasts (2023-2028)the global API market is anticipated to reach USD 258.60 billion by 2027 from USD 177.05 billion in 2021.

The factors that are expected to drive the growth of the API market include the rising burden of target diseases, such as infectious, cardiovascular, cancer, diabetes, and other diseases, and the increasing demand for biologicals and biosimilars, globally. For instance, as per the October 2022 report of the World Health Organization (WHO), about 10.6 million people were diagnosed with tuberculosis (TB) in 2021, as compared to 10 million people in 2020 globally. As per the same source, about 1.2 million children were among people who fell ill with TB in 2021. With the growing burden of diseases, the demand for therapeutics is also increasing. As a result, the consumption of APIs is increasing, which is driving the growth in the market studied.

Chart 1 - Number of People with Diabetes

Further, technological and clinical advancements in drug discovery and development, along with expansion by the companies in the area, are expected to boost the demand for APIs as these developments may accelerate the manufacturing and production of novel therapeutic drugs where APIs are used as raw materials. For example, in July 2022, WuXi Biologics launched its latest drug product facility, DP5, in WuXi, China. With this launch, there are a total of nine drug product facilities that are operating under WuXi Biologics.

Rising Consumption of APIs and Pharmaceuticals

In recent times, the burden of chronic disease has increased significantly around the world, putting immense pressure on the healthcare system of respective countries. This has led to greater production and consumption of pharmaceuticals, which is one of the major factors driving the demand for APIs.

India is one of the major exporters of pharmaceutical products in the world, and as per the 2021 bulletin of the Reserve Bank of India (RBI), the export of pharmaceutical products from India has increased with a compound annual growth rate (CAGR) of 9% from 2008-09 to 2020-2021, and by value, export increased significantly to USD 24.4 billion in FY2021 from USD 20.7 billion in FY2020 owing to the sudden surge in demand due to COVID-19. Further, as per the same source, in FY2021, of the total export value, about 78% was from drug formulations and biologicals, which was about 77% in FY2020. This data shows an increasing trend in demand for pharmaceutical products, and hence, the API market is growing.

Similarly, the August 2022 report of the Indian Brand Equity Foundation (IBEF) reported that over 50% of the world’s demand for various vaccines is met by the Indian pharmaceutical industry, as is 40% of generic demand in the United States and 25% of all pharmaceuticals in the United Kingdom. Further, as per the IBEF’s latest findings, the Indian pharmaceutical market will be about USD 120-130 billion by 2030.

In addition, as per the 2022 report from the European Federation of Pharmaceutical Industries and Associations (EFPIA), the production value of pharmaceutical products in Europe has increased significantly, from USD 207.9 billion in 2010 to about USD 312.4 billion in 2021. Hence, the growing pharmaceuticals market is expected to drive the demand for the APIs to produce therapeutic drugs and other products, which are expected to fuel the growth of the market in coming years.