In the dynamic realm of pharmaceuticals, the Active Pharmaceutical Ingredient (API) has emerged as a powerhouse, experiencing rapid growth throughout the year 2023. As the biologically active core of medications, responsible for delivering intended medical effects, the significance of API transcends traditional pharmaceutical narratives.
An API is the biologically active component within a drug formulation that produces the intended therapeutic effect. Essentially, it is the core substance responsible for the medication's efficacy.
Further, APIs can exist in various forms, including chemicals, proteins, or even simple mixtures, and they undergo specific processes to transform into the final pharmaceutical product. It is crucial in both generic and branded drugs, serving as the key therapeutic ingredient that interacts with the body to achieve the desired medical outcome.
This year has witnessed a remarkable surge in the API business, driven by multifaceted factors that have reshaped the global pharmaceutical landscape.
Central Role in the Global Pharma Market
API stands tall as the cornerstone of the global pharmaceutical market, contributing a substantial 35% to its expansive ecosystem. Its pivotal role extends beyond traditional drug formulations, playing a key part in the production of generic drugs that offer heightened accessibility and affordability compared to their branded counterparts.
Versatility in Drug Development
API's versatility is evident in its crucial role not only in generic drug production but also in spearheading the development of innovative pharmaceuticals. From biosimilars and biologics to novel delivery systems, API serves as the linchpin for ushering in new and groundbreaking drug formulations.
Key Input for the Biopharmaceutical Sector
The biopharmaceutical sector, driven by an increasing demand for personalised medicines and high-tech therapeutics, relies heavily on API as a foundational input. This burgeoning sector has fueled the demand for API, further propelling its growth in 2023.
India's Pivotal Position
India has solidified its standing as the third-largest API producer globally, capturing an impressive 8% share of the market. Fueled by a robust domestic market, advanced chemical industry, skilled workforce, and stringent quality standards, India's potential as a major global API supplier has become increasingly evident.
Resilience Amid Supply Chain Disruptions
The global search for alternative sources of bulk drugs, prompted by disruptions caused by the COVID-19 pandemic, trade wars, and geopolitical tensions, has positioned India as a resilient and sought-after hub for API manufacturing.
Favorable Regulatory Environment
India's commitment to fostering pharmaceutical manufacturing is evident in its regulatory landscape. Initiatives like the Production-Linked Incentive (PLI), National Pharmaceutical Pricing Authority (NPPA), and Drug Controller General of India (DCGI) showcase a proactive approach to reducing dependence on imports and promoting domestic manufacturing.
Ageing Population and R&D Excellence
The growing and ageing population in India has created an upsurge in demand for pharmaceutical drugs and APIs. This demographic shift not only fuels the demand for existing medications but also presents opportunities for developing new drugs tailored to the specific needs and preferences of the ageing populace. India's strong research and development (R&D) ecosystem, with institutions such as IITs, IISERs, and NIPERs, plays a pivotal role in driving innovation and excellence in pharma manufacturing.
As the API business continues its upward trajectory, insights from industry leaders provide valuable perspectives on the dynamics propelling this surge. The following narratives offer an in-depth understanding of the factors influencing the API landscape.
Sharing his thoughts, Biswajit Mitra, CMO, Cadila Pharmaceuticals, said “The API business is soaring on the wings of a global healthcare revolution. Driven by a confluence of factors – from booming generics and emerging markets to technological advancements and collaborative spirit – it holds immense potential to improve access to quality healthcare globally.”
Mitra noted, one of the primary growth drivers is the burgeoning demand for generics. Patent expirations and cost-conscious healthcare systems are propelling these affordable alternatives to the forefront. This, in turn, creates a fertile ground for API manufacturers, who play a crucial role in their production.
Simultaneously, per Mitra, the expansion of healthcare access in emerging markets is opening up new frontiers for APIs, further amplifying the demand.
Salim Shaikh Sadiq, founder and chairman - Symbio Generrics, said, ‘’API business is growing because of the significant shift of manufacturing from China and Europe to India, making it the first choice for partnering with API manufacturers. Along with the impactful PLI scheme by the Government of India. The CAGR for the API business is expected to be above 10% from here till 2030.’’
These reflections from industry experts provide a firsthand account of the factors fueling the API business's dynamic growth, paving the way for a transformative phase in the pharmaceutical sector.
Expanding Infrastructure and Investment
Global pharmaceutical giant Rusan Pharma has inaugurated an advanced API facility in Pithampur, Madhya Pradesh, with a total investment reaching INR 300 Cr over two phases. The facility, aligned with international regulatory standards, boasts a production capacity of 400 metric tonnes annually. Supported by Madhya Pradesh's governmental incentives and strategically located in a Special Economic Zone, the facility is poised to streamline operations and enhance export processes through the dry port.
Cadila Pharmaceuticals, a multinational pharmaceutical company based in Ahmedabad, has unveiled its advanced API Plant at Dahej, with a significant investment of INR 200 Cr. The facility incorporates advanced technologies, including Distributed Control System (DCS) automation. Notably, Cadila Pharmaceuticals signed an MoU with the Gujarat Government for a comprehensive investment of INR 1,000 Cr until 2025. This investment aims to expand existing facilities, boost in-house manufacturing capabilities, and create employment opportunities for 500 individuals by 2025.
Strategic Acquisitions and Digital Initiatives
India Resurgence Fund (IndiaRF) is set to acquire Ind-Swift Laboratories' Contract Research and Manufacturing Services (CRAMS) and Active Pharma Ingredients (API) for INR 1650 Cr. This strategic move, pending approval from shareholders and authorities, will see the transfer of API and CRAMS business to Synthimed Labs, an IndiaRF portfolio firm. The transaction aligns with the growing trend of strategic investments in India's API sector.
WiStride, India's pioneering intelligence-powered B2B platform for pharmaceutical ingredients, is gearing up to launch its digital platform. Scheduled for release on October 6, the platform aims to transform the pharmaceutical B2B commerce landscape by offering two key services: WiStride Edge, providing data-driven market intelligence, and WiStride Commerce, facilitating transparent and efficient connections between buyers and suppliers.
Kotak Strategic Situations Fund (KSSF), a part of Kotak Mahindra Group's asset management arm, plans to invest INR 1,600 Cr in the recently acquired API business from Viatris by Nimmagadda Prasad. The funding, a combination of structured debt and equity, aims to support this strategic acquisition, with additional financing from Deutsche Bank and DBS.
India's API sector stands out in 2023, marked by advanced facilities and strategic investments, playing a crucial role in global pharmaceutical growth. As we close the year, it's clear that the API business is on a strong path, positioning India as a key player globally.
The global API market, estimated at $193.15 billion in 2023, is expected to hit $285.29 billion by 2028, growing at 6.72% CAGR. This growth is powered by rising demand for generic drugs, an increase in chronic diseases, and the adoption of AI in drug discovery.
The College of Healthcare Information Management Executives (CHIME) is an executive organization dedicated to serving senior digital health leaders. CHIME includes more than 5,000 members in 56 countries and two US territories and partners with over 150 healthcare IT businesses and professional services firms. CHIME enables its members and business partners to collaborate, exchange ideas, develop professionally and advocate the effective use of information management to improve the health and care throughout the communities they serve. CHIME's members are chief information officers (CIOs), chief medical information officers (CMIOs), chief nursing information officers (CNIOs), chief innovation officers (CIOs), chief digital officers (CDOs), and other senior healthcare leaders. The CHIME India Chapter became the first international chapter outside North America in 2016 and is now a community of over 70+ members in India. For more information, please visit www.chimecentral.org