The demand patterns for APIs parallel end-market trends with projected strong growth in emerging markets and for generic APIs.
The global API market, which includes captive use, or APIs used from pharmaceutical companies for in-house production of finished-dosage
forms, and the merchant market, or APIs manufactured by third-party providers, was valued at $91 billion in 2008, according
to a report by the Chemical Pharmaceutical Association (CPA). CPA is a Milan-based association representing Italian producers
of intermediates and APIs for generics.
Formulation development forum: nanodiamonds for delivery of poorly water-soluble drugs
The captive API market accounted for 60%, or $55 billion, of the global market in 2008, and the merchant market accounted
for 40%, or $36 billion, in 2008. Between 2004 and 2008, growth in the captive API market outpaced that of the merchant market.
Between 2004 and 2008, the captive API market grew at an annual average rate of 7.6%, from $41 billion in 2004 to $55 billion
in 2008. The merchant API market increased, 6.5%, from $28 billion in 2004 to $36 billion in 2008. CPA attributes the differential
in part to consolidation among pharmaceutical companies and the resulting availability of more in-house API production capacity.
Innovator versus generic APIs
. The rising importance of generic drugs is reflected in the recent growth patterns in the merchant API market. The merchant
market for generic APIs has grown much faster than the market for innovator APIs. Between 2004 and 2008, the merchant market
for generic APIs increased at an average annual rate of 9.1% from $12 billion in 2004 to $17 billion in 2008, according to
CPA. In contrast, the merchant market for branded/innovator APIs increased at an average annual rate of 4.4% from $16 billion
in 2004 to $19 billion in 2008. Looking ahead, the global merchant market for APIs is projected to increase at an average
annual rate of 6.8% through 2013, increasing from $36.0 billion in 2008 to $50 billion in 2013. Growth in innovator APIs is
projected at only 1.8% during this period (from $19 billion in 2008 to $20.8 billion in 2013), compared with growth of 11.4%
for generic APIs (from $17.0 billion in 2008 to $29.2 billion in 2013), according to CPA.
North America accounted for the largest share of the merchant API market (both innovator and generic) in 2008 with a 44.7%
share and the US alone accounted for 41.9%. The US is also the largest consumer of generic APIs, representing 22.9% of global
generic API demand in 2008, according to CPA. In contrast, China only represented only 9.8% of combined global merchant demand
(innovator and generic) in 2008, but was the second largest consumer of generic APIs behind the US with a 19.2% share, according
to CPA. Although the US is projected to remain the largest consumer of APIs (both innovator and generic) with a projected
36.6% share in 2013, China will become the largest consumer of generic APIs with a projected 26% share of the global merchant
market for generic APIs followed by the US with a 20.5% share, according to CPA.
On the horizon...
Generic API demand.
China, India, Latin America, and Central and Eastern Europe, particularly Russia, represent significant growth opportunities
for the merchant market for generic APIs. Between 2004-2008, India and China accounted for the highest growth rates in the
merchant market for generic APIs with respective annual growth rates of 15.8% and 11.8%. India and China now account for roughly
25% of the global merchant market for generic APIs, and growth in those countries is expected to remain strong. China is projected
to have the highest average annual growth rate for merchant generic APIs—18.4%—through 2013, when the market in China is expected
to reach $7.6 billion compared with $3.2 billion in 2008. India is expected to achieve 14% annual growth in merchant generic
APIs through 2013, when the market is projected to reach nearly $1.7 billion compared with $860 million in 2008.
Growth in Russia and Brazil, the other countries among the BRIC nations, is also expected to be robust. The merchant market
for generic APIs in Brazil is projected to increase annually at 15.2% through 2013, from $340 million in 2008 to $690 million
in 2013. Russia's merchant market for generic APIs is expected to increase 16.3% annually through 2013, increasing from $480
million in 2008 to $1.02 billion in 2013, according to CPA.