According to a recent report from ResearchAndMarkets.com entitled “Active Pharmaceutical Ingredients: Global Markets,” the Active Pharmaceutical Ingredients Market was valued at $247.8 billion in 2024 and is expected to reach $347.9 billion by 2029, rising at a CAGR of 5.90%.
 
Active Pharmaceutical Ingredients (APIs) serve as fundamental components in drug manufacturing and development within the global pharmaceutical supply chain.

Drivers of Growth

According to the report, the growth of the API market is fueled by the surging demand for specialty drugs, alongside the prevalent use of generic medications. Significant factors contributing to this expansion include advancements in API production technology, increased production capacity, a rising prevalence of chronic illnesses, the development of global healthcare infrastructures, and heightened investments in drug development.
 
Chemical synthesis of APIs is the main method for the production of APIs and acts as a replacement for natural extraction procedures to improve economies of scale. The global market for synthetically manufactured APIs was valued at $181.3 billion in 2023 and is expected to achieve a CAGR of 5.4% and reach a value of $246.1 billion by the end of 2029.
 
The importance of biotech production methods is growing due to the rise of biologic drug products made almost exclusively this way. Advances in synthetic biology technologies, such as genetic engineering, metabolic pathway optimization and analytical instrumentation, have further enhanced the efficiency and yield of biotechnology processes, making them more commercially viable. The global market for APIs manufactured through biotech methods was valued at $66.5 billion in 2023, and this market is expected to have a CAGR of 7.4% and reach a value of $101.7 billion by the end of 2029.
 
The COVID-19 pandemic highlighted the risks associated with over-dependency on certain regions for API supplies. Consequently, the report reveals there is a growing trend to diversify the supply chain and boost domestic API manufacturing capabilities in the U.S., Europe, Japan, and India to strengthen supply chain resilience.