Our virtual CPHI Discover event (17th-28th May) is just around the corner, full to the brim with three main content tracks. Here, we explore the major trends in APIs, Ingredients & Formulation
Advances in the pharmaceutical R&D lab are impacting the firms that make active pharmaceutical ingredient (API) and excipients and those that provide formulation development services.
Ingredients and APIs
The pharmaceutical industry’s focus on more potent, more complex products is having a profound effect on its supply chain. Its decades old reliance on suppliers for active ingredients is reciprocal: the API industry invests and innovates in response to customer demand.
One example of this in recent years is in high potency APIs. Various estimates indicate the global HPAPI market will increase from its current value of around $20 billion to $26 billion by 2023 as the pharmaceutical industry increase its focus on treatments for cancer.
As a result, in recent years there has been a significant increase in firms producing high potency APIs, which has been the fastest growing segment of the ingredients sector for a decade . HPAPIs require special containment and handling systems, which require firms to make investment. Likewise, the need to ship such products in controlled, secure conditions calls for a dedicated and robust distribution infrastructure.
Target markets
Ongoing globalization of the pharmaceutical industry is also reshaping the API industry. On the one hand, drug company efforts to access emerging markets is increasing demand for ingredients.
Africa is a good example. Although pharmaceuticals are currently manufactured across South Africa, Kenya, Nigeria, Algeria, Morocco and Egypt, the continent still imports over 70% of the drug actives it uses.
Similarly, Latin America holds diverse and huge potential for pharmaceutical companies and – as a result – the API sector. According to analysis published in February , by 2025, the high potency API market in Latin America is expected to be worth $3.52 billion, an increase of 50 percent from last year.
The progressive loss of patent protection in various markets also has implications for the API sector. As branded drugs lose protection, they become potential targets for generic competitors and the API firms that supply them.
Global API supply
Asia has been a major supplier of APIs for several decades. According to analysis by the US Food and Drug Administration (FDA), 72% of APIs used in medicines sold in the country come from overseas. In the EU, analysis indicates that around 66% of ingredients are made outside the continent.
This reliance on imported APIs has been a concern for industry groups and governments alike, resulting in various efforts to encourage local production.
The coronavirus pandemic has amplified these concerns particularly when – for a short period – the Indian Government banned the export of certain APIs in a bid to prevent local shortages. The ban was quickly lifted , however, its lasting impact is likely to be an acceleration of drug industry efforts to find alternative, local sources.
More recently , India banned exports of the antiviral Remdesivir (both the API and finished product), which is being made by seven manufacturers under license from Gilead.
Digitization
Another supply chain dynamic impacting the API market is the use of digital technologies . On the one hand, digitization is helping ingredients firms to secure supply chains and to track the flow of ingredients from the facility to wholesaler to pharmaceutical customer.
Digital technologies are also increasingly being used by API suppliers to provide their pharmaceutical industry customers with oversight of production and thereby enhanced ability to react to changing demand patterns in various global markets .
Formulations
The API sector is also being impacted by innov...
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