Minimum Growth Opportunities for SMEs in Active Pharmaceutical Ingredients Market due to High Initial Investment
An active pharmaceutical ingredient (API) is the basic ingredient used in the manufacturing of drugs or any formulation that has positive therapeutic and pharmacological effects. They are substances synthesized either biotechnologically or through chemical methods. Active pharmaceutical ingredients provide several health benefits and are not limited to curing or treating the disease, but are also used for prevention and diagnosis at times.
As per a recent market study led by Transparency Market Research, the global active pharmaceutical ingredients market is anticipated to grow rapidly in the coming years. The market, which stood at US$119.7 billion in 2013, is expected to reach US$185.9 billion by the end of 2020. From 2014 to 2020, the market will register a CAGR of 6.5% due to the development in biogeneric drugs and increase in Abbreviated New Drug Applications (ANDA) in the recent past.
However, quality control is the prime factor when it comes to manufacturing essential drugs. The global market has therefore only a limited number of manufacturers that have their own API manufacturing capabilities for producing pharmaceutical products.
Browse Market Research Report of Active Pharmaceutical Ingredients (API) Market:
Small and Medium-sized Firms in Major Countries Encounter Challenges
The two major restraints for manufacturers in the global API market are price volatility and limited resources to produce high-quality active pharmaceutical ingredients. A majority of the small to medium-sized manufacturers and suppliers in major regions such as North America, Europe, and Sub-Saharan Africa have to purchase all APIs in the open market.
The API markets in Europe and North America are highly competitive and fragmented in nature when it comes to the presence of small and medium-sized firms. However, all API suppliers are facing major challenges in these regions due to the low number of new chemical entity launches, pharmaceutical mergers and acquisitions, as well as the lack of capability differentiation in the global market.
API costs are extremely high, since the raw materials for the same are rare and are obtained at high prices. The price of APIs is considered to be the primary restraint because its production requires substantial investment in chemical manufacturing technologies. Thus, small manufacturers in emerging countries need to navigate across the global active pharmaceutical ingredients market and look out for major manufacturers just to make sure that they get a good product at a fair price.
Browse Press Release of Active Pharmaceutical Ingredients Market:
While generic API production is practiced in only a limited number of countries, Chinese and Indian companies are increasingly becoming the major suppliers of active pharmaceutical ingredients. While generic API production is practiced in only a limited number of countries, Chinese and Indian companies are increasingly becoming the major suppliers for production of active pharmaceutical ingredients. Some of the successful major producers in the active pharmaceutical ingredients market such as Teva Pharmaceutical Industries Ltd., Mylan, Inc., Novartis AG, and Pfizer, Inc. are now gradually shifting from the West and establishing new production bases in India and China.