India Active Pharmaceutical Ingredients (API) Market Outlook to 2028

India Active Pharmaceutical Ingredients (API) Market Overview

The India API Market was valued at USD 12.4 billion in 2023. The market growth has been driven by several factors, including increasing domestic demand, the global shift towards generic drugs, and the Indian government's initiatives to boost domestic manufacturing under the Make in India campaign. The growth is also fueled by India's robust pharmaceutical manufacturing capabilities, which include a large number of US FDA-approved manufacturing facilities.

The Indian API market is dominated by several key players who have established themselves as leaders in both domestic and international markets. Some of the most prominent companies include Sun Pharmaceutical Industries, Dr. Reddy's Laboratories, Aurobindo Pharma, Cipla, and Lupin. These companies are known for their extensive product portfolios, which include a wide range of APIs used in various therapeutic areas. Their strong R&D capabilities, coupled with strategic partnerships and expansions, have allowed them to maintain a competitive edge in the market.

In 2023, Dr. Reddy's Laboratories announced the expansion of its API manufacturing capacity in Visakhapatnam, with an investment of USD 150 million. This expansion is aimed at meeting the growing demand for APIs in both domestic and international markets. The new facility will focus on the production of high-value APIs, particularly in the oncology and cardiovascular segments, further strengthening the companys market position.

The state of Gujarat was dominating the market in 2023. This dominance is attributed to the state's well-established pharmaceutical manufacturing infrastructure, favorable government policies, and the presence of major pharmaceutical companies such as Sun Pharma and Cadila Healthcare. Gujarat's strategic location, with access to major ports, also facilitates the export of APIs to international markets, further enhancing its position as a key player in the industry.

India Active Pharmaceutical Ingredients (API) Market Segmentation

The India Active Pharmaceutical Ingredients (API) Market is segmented into different factors like by product type, by application and region.

By Product Type: The market is segmented by product type can be broadly categorized into synthetic APIs and biological APIs. In 2023, synthetic APIs dominated the market due to their widespread use in generic drug manufacturing, which is a major strength of the Indian pharmaceutical industry. Synthetic APIs are easier to produce and offer cost advantages, making them the preferred choice for manufacturers targeting both domestic and international markets.

By Application: The market by application is segmented into cardiovascular, oncology, and anti-infectives. In 2023, the cardiovascular segment held the largest market share, driven by the high prevalence of cardiovascular diseases in India, which has led to increased demand for APIs used in the treatment of conditions such as hypertension and coronary artery disease. The rising awareness about heart health and the growing elderly population are also contributing factors.

By Region: The market by region is divided into north, south, east, and west. In 2023, the west region was dominating the market due to the region's robust pharmaceutical manufacturing infrastructure, favorable government policies, and proximity to major ports, which facilitate both domestic distribution and international exports. The presence of leading pharmaceutical companies also strengthens the region's market position.

India Active Pharmaceutical Ingredients (API) Market Competitive Landscape

Company Name

Year of Establishment

Headquarters

Sun Pharmaceutical

1983

Mumbai, Maharashtra

Dr. Reddy's Laboratories

1984

Hyderabad, Telangana

Aurobindo Pharma

1986

Hyderabad, Telangana

Cipla

1935

Mumbai, Maharashtra

Lupin

1968

Mumbai, Maharashtra

Cipla: In 2024, Cipla plans to pursue acquisitions and partnerships in the U.S., solidify its presence in India, accelerate growth in Europe, and improve profit margins in South Africa. The company is prioritizing addressing USFDA observations, growing its private and targeted tender business, mitigating risks for key launches, and resolving regulatory challenges at its manufacturing facilities.

Zydus Lifesciences: Zydus Lifesciences recently faced scrutiny from the US FDA, which issued 10 observations following an inspection of the company's injectable manufacturing plant near Vadodara, Gujarat. The inspection took place from April 15 to April 23, 2024. Zydus Lifesciences has committed to addressing these observations promptly in collaboration with the US FDA. This development has impacted the company's stock, which saw a decline of 2.79% on the BSE following the news.

India Active Pharmaceutical Ingredients (API) Market Analysis

Market Growth Drivers

Rising Demand for Generic Drugs Globally: The Indian API market is being driven by the global demand for generic drugs, particularly in the US and European markets. India's pharmaceutical exports rose 10% to USD 27.9 billion in FY24 (April 2023 to March 2024), despite a 3% dip in total exports, fueled by the expiry of several blockbuster drug patents and the increasing adoption of affordable generics in developed markets. This demand directly influences the growth of the API market as manufacturers ramp up production to meet international needs.

Increased Focus on Chronic Disease Management: The rising prevalence of chronic diseases such as diabetes, cardiovascular diseases, and cancer is driving the demand for APIs in India. As per the International Diabetes Federation (IDF), India currently has approximately 77 million individuals aged 2079 living with diabetes, a number projected to rise to 134.2 million by 2045. The need for effective and affordable treatments for chronic conditions is pushing pharmaceutical companies to produce more APIs, particularly in therapeutic areas such as anti-diabetics and antihypertensives.

Expansion of Healthcare Infrastructure in India: The expansion of healthcare infrastructure in India, especially in rural and semi-urban areas, is significantly boosting the demand for APIs. This growth is driven by the establishment of new hospitals and health centers, which require a steady supply of essential medicines. The ongoing development in healthcare facilities is expected to increase the need for various APIs, thereby contributing to the overall growth of the market.

Market Challenges

Dependence on Imported Raw Materials: The Indian API market faces significant challenges due to its heavy reliance on imported raw materials, primarily from China. This dependency exposes the industry to various risks, including supply chain disruptions, price volatility, and geopolitical tensions. Such vulnerabilities can hinder the growth and stability of the market, making it crucial for India to develop strategies to reduce its reliance on imports and enhance domestic production capabilities to ensure a more resilient supply chain.

Stringent Regulatory Requirements: The Indian API industry must navigate stringent regulatory requirements imposed by international markets, particularly the US and Europe. Compliance with these regulations involves significant costs, including investments in facility upgrades, quality assurance, and documentation processes. These expenses can be especially burdensome for smaller manufacturers, impacting their profitability and growth potential. The need to meet these high standards poses a continuing challenge for the Indian API market as it strives to maintain and expand its global presence.

Market Government Initiatives

Production- Linked Incentive (PLI) Scheme for API Manufacturing: In 2024, the Indian government continued its push to boost domestic API production through the PLI scheme, aiming to reduce dependence on imports and enhance self-reliance in key APIs. The initiative is expected to support the establishment of 25 new API manufacturing units, increasing domestic production capacity. By the end of June 2024, the PLI scheme for pharmaceuticals had attracted an actual investment of Rs. 29,268 crore, resulting in Rs. 1,61,209 crore worth of production and creating 71,763 jobs. The DoP approved 55 out of 278 applications, with 261 manufacturing locations commissioned by that time.

Establishment of Bulk Drug Parks: The governments plan to establish three new bulk drug parks by 2024, with an investment of USD 1.5 billion, is a significant initiative to strengthen the API manufacturing ecosystem in India. These parks are expected to provide common infrastructure facilities, reducing production costs and increasing the competitiveness of Indian API manufacturers.

India Active Pharmaceutical Ingredients (API) Market Future Outlook

The Indian API Market is projected to grow exponentially by 2028. This growth will be driven by the increasing demand for generic drugs, the rise of chronic diseases, and the expansion of the healthcare sector. Additionally, the government's continued support for domestic manufacturing and efforts to enhance the quality and competitiveness of Indian APIs in the global market will further bolster the market's growth.

Future Market Trends

Increased Investment in Biologics and Biosimilar APIs: By 2028, the Indian API market is expected to shift significantly toward the production of biologics and biosimilar APIs. This trend will be driven by the growing demand for advanced therapies, particularly in oncology and autoimmune diseases. Companies will focus on developing innovative biological APIs, supported by increased investments in research and development, positioning India as a key player in this segment of the pharmaceutical industry.

Growth in Export of High- Value APIs to Regulated Markets: The Indian API market is anticipated to experience substantial growth in the export of high-value APIs to regulated markets, including the US and Europe. This expansion will be fueled by the increasing global demand for high-quality, affordable APIs, along with India's enhanced regulatory compliance and production capabilities. This growth will further solidify Indias role as a major exporter in the global pharmaceutical supply chain.
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