Historically, most Pharma companies discovered and developed, and manufactured drugs very much in-house. But this has seen a major overhaul over the last couple of decades as more and more Pharma MNCs are looking towards outsourcing increasing amounts of their research and manufacturing processes to Contract Research or Manufacturing Organizations.
Although the Active Pharmaceutical Ingredient (API) market started catering to just the early stage intermediates, over time outsourcing has moved to across the value chain, including advanced intermediates to final dosage forms that are consumed by patients.
Pharma companies are spending more on outsourcing than ever before for the number says it all. As per Stratistics MRC’s latest data, the Global APIs market is anticipated to rise from billion $129.12 billion in 2015 to reach billion $198.8 by 2022 at a staggering CAGR of 6.4%. . The growth can be primarily attributed to the growth in affordable healthcare to heighten ease of access to medicines. Impact of this can be witnessed where the growth of generic APIs has surpassed that of new innovator APIs.
Factors Driving Active Pharma Ingredient Market
Yes, the API market is facing some of its own set of challenges, but factors that are overpowering the odds multi-fold. Some of the key factors that can be attributed to the rising trend toward outsourcing the research and manufacturing of advanced APIs are as follows –
Patent Expiration – One of the key parameters that have resulted in the boom in the generic APIs can also be attributed to many global patents for prominent drugs going off the shelf in the Pharma industry. It is anticipated that as a result of this in the next 5 to 6 years, the global market for APIs will be primarily driven by increased demand for Pharma products including generics and biological drugs.
Although stringent validation and guidelines from authorities and scattered market may hamper the API market’s growth, other factors are expected to override them towards continued growth.
Demand for Speciality Medicines – As against developed geographies, although the adoption of generic medicine is much higher in the developing nations especially in China and India, the demand for branded specialty medicines is one a rise. Some of the predominant trends contributing to this are the availability of adequate manufacturing units in the developing nations, rising spending power, and larger stress on transparent pricing.
The adoption of generics, which currently stands at 80% in developing markets, is highly anticipated to shrink in the years to come.
On the contrary, as a result of abridged ability to spend on healthcare by the populace of the developed market, the adoption of generics in these markets is on a rise. Pharma players from these geographies are constantly on a hunt to outsource manufacturing of generics to units capable of delivering them at lower price points.
Asia Pacific Surge – APAC region, especially China and India, is rapidly emerging as vital destinations for API market. This can primarily be attributed to the upsurge in health care spending in the region, the growth rate of which has outpaced that of matured markets such as Europe, Australia, and North America.
API Manufacturing units in the region in addition to catering its local demand are increasingly allying with pharma companies from the matured markets supplying to their wares. These contract manufacturing units are progressively beating the competition by being price competitive and by being complete & compliant to regulations set by regulatory bodies from matured markets.
Asia Pacific’s API market is growing at 8% CAGR and is expected to have a share of over 33% globally by 2020. The same numbers stood at 27% in 2015. Some of the challenges that the region is witnessing is the poor quality of APIs. Back in 2016, the US FDA had issued cautionary notices to some for non-compliance of GMP which has resulted in denial of entry of their products into the United States.
But these concerns are being addressed at a progressive pace. With more and more API manufacturing firms becoming FDA compliant/approved the concerns of poor quality APIs is only expected to fade away. India stands second i.e. only next to the USA, has the highest number of FDA approved units in the world. Periodic inspections of the units have become a standard in the CMO industry.
Key factors that are aiding API units in the APAC region be price competitive include – availability of abundant raw materials and lower labor costs, complemented by the expert knowledge base and human resources.
The governments in these regions too are encouraging their manufacturers by providing regulatory support, favorable tax reforms, infrastructure and more, thus driving the industry growth.
Biopharma APIs – The Pharma sector is witnessing a swelling prominence on biopharmaceuticals API. Biopharmaceuticals being a highly expensive affair and complex and process-intensive as against small molecules, outsourcing their manufacturing is becoming gradually reality. This sector too is expected to hugely contribute to the rise of the API sector, especially in the APAC region.
CMO Value Added Services – Contract Manufacturing and Research Services are increasingly adapting to the demands and changes of the API market. Such units are now capable of including value-added services to their brand partners, the services which include logistics, packaging, anti-counterfeiting services, etc. These have made outsourcing of API research and manufacturing very attractive.
Conclusion
API market pertaining to both the generics and specialty medicine is expected to grow in the coming years. With more and more contract research and manufacturing companies looking at delivering one-stop API solution, supplemented by diverse capabilities, to their brand partners the industry could also witness longer partnerships. Acquisitions of innovation-oriented CMOs/CRAMS by Pharma brands and are some possibilities that cannot be ruled out in the near future.