Moderate growth is expected for the global market for APIs. The generic API market is stronger as recent and projected growth rates are expected to outpace growth of innovator/branded APIs. India, China, and Italy will continue to be major suppliers of APIs to the global market, with India suppliers expected to see strong growth during the next five years.

The global market for APIs for human use was valued at $101 billion in 2010, according to data from the Italian Chemical Pharmaceutical Generic Association (CPA) in its recent report, “Competition in the World API Market. “ Of the total market value, the captive market (i.e., APIs produced within pharmaceutical companies themselves for their own needs) accounted for 61.4% of the total API market, or $62 billion, in 2010. The merchant market for APIs (i.e., APIs sold by third parties) accounted for the remaining 38.6%, or $39 billion, according to CPA. For purposes of this market, “API” refers to the active pharmaceutical ingredient and advanced intermediates (i.e., intermediates requiring GMP compliance).

Generic versus innovator APIs
The global API merchant market is almost evenly divided between APIs supplied to the generic-drug market and APIs supplied to the innovator-drug market. Of the global merchant market for APIs, generic APIs accounted for approximately 48.7%, or $19 billion, and branded (i.e., innovator) APIs accounted for the remaining 51.3%, or $20 billion,in 2010, according to CPA. Of the global generic API market of $19 billion, Asia-Pacific accounted for the largest share at 37.5%, the United States, the second largest share at 21.2%, and Western Europe for 16.8%. As of 2010, China had become the largest single market for generic APIs, accounting for 21.3% of the world market or $4.05 billion, which surpassed the US market for generic APIs, which is valued at $4.03 billion, according to CPA. In Western Europe, the largest markets for generic APIs are Germany and the United Kingdom. In Eastern Europe and the Commonwealth of Independent States, Russia is the largest single market, accounting for 45.8% of this region’s generic API market.

Market forecasts: API demand
The world merchant API market as a whole, both generic and branded/innovator APIs, is projected to increase at an average rate of 5.1% during the next five years to reach $50 billion by 2015, up from $39 billion in 2010, according to CPA. The demand for generic APIs, however, will outpace growth for branded/innovator APIs. The merchant market for generic APIs is projected to increase at an annual rate of 7.3% to reach $27 billion by 2015. The merchant market for branded/innovator APIs is forecast to increase at the annual rate of only 2.8% to reach $23 billion by 2015, according to CPA. This differential in growth rates will cause the share for generic APIs in the merchant market to increase from 49.7% in 2010 to 54% by 2015 and for the share of innovator APIs in the merchant market to decrease from 51.3% in 2010 to 46% by 2015, according to CPA.

The fastest growth rates for the generic API merchant market during the next five years will be in China (12.6% yearly average), Brazil (11.1% yearly average), India (10.3% yearly average), South Korea (8.3% yearly average), Russia (8.0% yearly average), and Ukraine (6.1% yearly average). Other smaller emerging markets that are set to rise above the world average during the next several years are Vietnam, Laos, Thailand, Pakistan, Chile, Colombia, and Peru, according to CPA.

Market forecasts: API supply
Italy is the largest generic API producer in Western Europe followed by Spain. Historically, Italy had been the largest generic API producer globally before the rise of China and India in the global API market. Italy, however, still holds a prominent position in the global API market. The market share held by Italian fine-chemical companies/API manufacturers in the global API merchant market (generic and innovator APIs) has remained stable during the past five years: 10.4% in 2010 and 10.3% in 2005, according to CPA. Italy’s share of the global generic API merchant market has decreased from 18.1% in 2005 to 16.3% in 2010.

Italy’s share in the Western European market has increased. The market share held by Italian fine-chemical companies/API manufacturers in the Western European generic API merchant market has risen from 29.6% in 2005 to 31.5% in 2010, according to CPA. The percentage share of Italian fine-chemical companies/API manufacturers for the US generic API merchant market also has risen: from 25.1% in 2005 to 30.8% in 2010, according to CPA. Overall, Italy’s share in the world API merchant market is expected to remain stable during the next five years at approximately 10%, but its share in the global generic API merchant market is expected to decrease to 14.7% by 2015 from 16.3% in 2010, according to CPA.

The market share held by Spanish API manufactures in the global API merchant market (generic APIs and branded/innovator APIs) was 3.2% in 2010. The country’s share in the world generic API merchant market was 5.5% in 2010, according to CPA.

The market share held by Indian API manufacturers in the global API merchant market (generic APIs and branded/innovator APIs) was 6.5% in 2005, 12.0% in 2010, and is expected to increase to 22.0% by 2015, according to CPA. India’s share of the global generic API merchant market has increased from 13.5% in 2005 to 22.1% in 2010 and is expected to increase to 33.3% by 2015. Export sales of generic APIs from India increased at an average of 18.9% between 2005–2010 compared with an annual average of 15.9% to the country’s domestic market.

India is expected to be the fastest growing API supplier during the next five years and will keep its position above China. The market share held by Chinese companies in the global API merchant market (generic APIs and branded/innovative APIs) has risen from 14.2% in 2005 to 19% in 2010, according to CPA. The market share held by Chinese companies in the global generic API merchant market increased from 31.1% in 2005 to 35.6% in 2010. Although China remains the largest API supplier on a global basis, growth rates from 2005–2010 of Chinese API suppliers were less than those of Indian suppliers. China’s share of the Western European generic API merchant market fell from 39.2% in 2005 to 35% in 2010. China’s share of the US generic API merchant market increased slightly from 11.5% to 12.9% in 2010, according to CPA. From 2010 through 2015, sales of Chinese API manufactures to the global API merchant market (generic and innovator APIs) are projected to increase at an annual average rate of 9.2% compared with an annual average of 18.5% for Indian API manufacturers, according to CPA. For the global generic API merchant market, sales by Chinese API manufacturers are expected to increase at a yearly rate of 8.1% compared with 16.5% for Indian API manufactures between the forecast period of 2010 to 2015, according to CPA.