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Outlook of Active Pharmaceutical Ingredients: the post-pandemic reshaping
February 2025
This report presents a comprehensive analysis based on in-depth research, extensive data analysis, and a targeted survey of industry professionals. By integrating these three methods, we aim to provide a well-rounded perspective on the topic, grounded in both quantitative insights and qualitative observations. The purpose of this report is not only to provide a comprehensive overview of the relevant data and facts of 2023, concerning the pharmaceutical chemical industry but also a lucid and open-minded analysis of the events and trends of the last years, which may inspire the reader to develop his or her own idea about the future of the industry and a consequent strategy according to the type of company in which he or she operates. This report is not intended as an informational report but as a tool for insight. CPA entrusted the preparation of this report to a dedicated team of researchers, each bringing expertise in chemistry, pharmacology, economics, international trade, public policy, intellectual property rights, and regulation, complemented by strong academic backgrounds in these disciplines
The research phase thoroughly reviewed current literature, industry reports, and regulatory guidelines to establish a foundational understanding and identify key trends. This led to the development of data analysis, where we examined relevant datasets, uncovering patterns, correlations, and unique insights essential for understanding the broader context.
To enhance the relevance and depth of this report, we conducted a survey targeting key persons in companies manufacturing APIs across various roles and regions, capturing their experiences, challenges, and forward-looking insights. Their responses have allowed us to validate findings and gain nuanced perspectives directly from industry workers.
This report aims to offer a holistic view of the subject by combining research, data analysis, and survey insights, highlighting actionable insights and opportunities for strategic decision-making.
History teaches us that major advancements in various fields, so-called innovative breakthroughs, have often originated from individuals who have never fully adapted to trends but have created new trends with so-called different thinking.
In all fields, even the most rational and technical, applying the right amount of creativity and courage is decisive for success. Equally determinant are knowledge and experience. And on this last, we are modestly a guide for the reader.
Index of contents CONTENTS Executive summary 1 The API industry 2 Key topics in the market of pharmaceuticals 3 Coping with Drug shortages 3.2 Recent shortages of medicines 4 Looking ahead 4.3 The outlook for the API industry 5 Conclusions The 2024 report on the Active Pharmaceutical Ingredients (API) industry comprehensively analyzes the sector’s post-pandemic reshaping, integrating research, data analysis, and insights from a targeted survey.
1.1 API market and trends
1.2 API trade flow and dependencies
1.3 The business model: CDMO and generic API manufacturing
1.4 The supply chain
1.5 The market conditions
1.6 The economic performance of API manufacturers
1.7 Investment and Employment
1.8 Mergers and Acquisitions
2.1 Health expenditure
2.2 The pharmaceutical market trends 2.3 The market of generics
2.4 The case of hormones and antibiotics
3.1 The international trade of some amino-acids
3.3 Addressing shortages of medicines
4.1 Macroeconomic and Geopolitical Forecast
4.2 Innovation in API and Manufacturing Technology
The global API market has experienced consistent growth, driven by rising pharmaceutical consumption, population aging, and global economy advancements. According to our analysis, API sales increased in 2023 and, with same trend, in 2024 as confirmed by the survey conducted for this report.
Small molecules dominate the market, but large molecules, such as biotechnological proteins and monoclonal antibodies, are growing faster, reflecting their increasing therapeutic significance. Most large molecules are "captive," with production tied to integrated companies that handle both API and finished drug formulation.
While the era of blockbuster drugs has transitioned to niche-focused “nichebusters” with a specific target. That means that the API market is increasingly shifting toward specialty pharmaceuticals, which are high-cost drugs targeting complex or rare diseases. Both biologics and small molecules are part of this trend. Specialty drugs require advanced technologies and higher expertise, making them suitable for Western manufacturers necessarily focused on high-value products.
The API industry remains globalized, with significant regional differences in production and trade. Production is heavily concentrated in Asia, with India and China producing over 75% of APIs globally. North America and Europe lead in high-value, innovative API production but remain reliant on Asian suppliers for generics and raw materials. Notably, India imports 35% of its APIs, 70% of which come from China.
API manufacturers operate through two main business models: Contract Development and Manufacturing Organization (CDMO) and generic API manufacturing.
CDMO focuses mainly on high-value, specialized APIs, and offer services to pharmaceutical companies seeking to outsource R&D and manufacturing. Large companies are better positioned to capitalize on this segment, although smaller firms have found success in niche areas. Survey findings indicate a shift toward CDMO activities in 2023 relative to API manufacturing. This trend reflects growing demand for innovative therapies and personalized medicine. Additionally, the survey showed that smaller companies often found success by focusing on niche specializations or early-stage development.
Generic API is characterized by high-volume, cost-competitive production; this segment is dominated by Indian and Chinese manufacturers. The survey revealed that over 50% of respondents reported increased production value for generic APIs in 2023 compared to 2022. Survey findings highlighted geographic variations in the CDMO-to-API production ratio. CDMO is more relevant in Europe than in Asia, where the emphasis remains on generic APIs.
Europe and the United States now rely on imports for the majority of APIs, raising concerns about overdependence on Asia. The market for antibiotics, for example, highlights strong dependencies on countries like China, which dominate exports of essential raw materials and API. Drug shortages have emerged as a critical challenge due to supply chain disruptions (especially during the Covid-19 pandemic), geopolitical tensions, and regulatory complexities. The geographic concentration of API production, particularly in Asia, has exposed vulnerabilities. Public institutions are exploring measures to increase supply chain transparency by enhancing traceability and collaboration across the supply chain, while firms are diversifying their suppliers as confirmed by the survey. Reshoring is not a concrete option in the short-medium term.
Innovation remains central to the API industry’s evolution. Advances in biotechnological processes, such as fermentation and genes engineering, are driving the development of complex APIs. The rise of antibody-drug conjugates exemplifies the growing convergence of biologics and small molecules, offering targeted treatments with reduced side effects.
The use of renewable energy and green chemistry principles aligns with industry efforts to reduce carbon footprints and operational costs. Respondents anticipate an increase in strategic alliances and M&As, emphasizing the importance of collaboration in addressing industry challenges.
Health expenditure continues to rise, driven by aging populations and increased healthcare access in developing nations. The pharmaceutical market reflects these changes, with generic drugs playing a significant role. Survey data reveals that health expenditure as a share of GDP is projected to increase in most G7 economies, emphasizing the growing importance of affordable generics and innovative medicines.
The API market is expected to grow at a compound annual growth rate in a range between 5% and 7% through 2030, supported by innovations in biologics, increased healthcare spending, and demographic trends. Surveyed companies are optimistic about the growing demand for APIs and CDMO services, reflecting the industry's pivot towards outsourcing and specialization.
In conclusion, the API industry faces dual challenges: sustaining growth while mitigating risks exposed by the pandemic and geopolitical shifts. While Asia will likely remain central to production, collaboration, innovation, and strategic diversification will be pivotal for navigating the sector's complexities and ensuring global healthcare needs are met.