The challenge to stay competitive in the API industry

Manufacturing landscape

Currently, more than 3,000 API manufacturing groups are operating across the globe. Clarivate Analytics assesses the capabilities and experience of API manufacturers using a proprietary scheme based on objective regulatory data. According to the Clarivate Analytics Newport database, the majority of API groups, 64% or 1,955 corporations, are classified as "local." These companies are focused on or may only be capable of supplying their domestic market or less regulated markets. Another 504 companies, or 17%, are classified as "potential future"; these companies are interested in supplying to regulated markets but may have limited or no known experience. There are currently 542 API manufacturers (18%) classified as "established" or "less established" which means these companies are capable of supplying highly regulated markets such as the U.S. and EU. Big Pharma only accounts for 1% of API manufacturers & fine chemicals

API manufacturing facilities able to supply highly regulated markets are mainly based in the U.S., Europe, Japan, India and China. Below, Figure 2 demonstrates the number of API groups by country rated as "established" and "less established" that are able to supply regulated markets. Several second wave emerging countries like Argentina, Brazil, South Korea and Russia have some API industry due in part to governments offering incentives to encourage domestic API manufacturing to decrease dependence on foreign drug substance supply. However, despite predictions of API manufacturing moving to emerging countries, there has been slow growth of manufacturers in these regions. The majority of emerging countries depend on imported API for domestic production of finished medicines.

Industry challenges

Competition is increasing for both API suppliers and customers. Generic companies are finding that mergers, acquisitions and regulatory issues have taken some facilities out of the running as supply partners. Generic API manufacturers are challenged with developing syntheses that don’t infringe on patents while keeping costs low.

Companies interested in supplying APIs to regulated markets are coping with increasing regulatory-related expenses, such as fees related to the Generic Drug User Fee Act in the U.S.

Regulatory requirements are tightening and will likely continue to do so with a push for more transparency in the supply chain. This could result in requiring certification for good manufacturing practices for key intermediates and raw materials. Environmental regulations, especially in China, are putting pressure on corporations to remedy pollution problems. Some plants are being shut down or moved, causing capacity issues and supply chain interruptions from raw materials to intermediates and APIs.

pharmaceutical drug intermediate

Products

Shree Ganesh Remedies Limited is now leading manufacturer of Pharmaceutical Intermediate Cyclopropanecarbonyl chlorideCAS No: 4023-34-1

SGRL is leading exporter of CAS No: 821-48-7 Bis(2-chloroethyl)amine hydrochloride

Toll Manufacturing of CAS No: 1771-18-2 : 2-Methoxyphenothiazine

Market outlook and conclusions

According to the EFCG, the growth rate per year for APIs is anticipated to be 4.5% in the generic sector and 4.8% in the custom sector. Newer APIs may not be simple small molecules but, rather, more complex, highly potent APIs and biologics which require more specialized equipment and even dedicated facilities.

In order to keep pace with the industry, many generics-focused companies will continue to gain capabilities through acquisition, as Strides did when purchasing Perrigo’s API plant. On the innovator side, a number of companies are building their own facilities to pursue new therapeutic areas of interest. Still other innovators have been trending toward outsourcing the development, scale-up and commercial production of API to custom development and manufacturing organizations with diverse capabilities that can offer a one-stop shop.

API Intermediate manufacturers

pharmaceutical intermediates manufacturers

As the market grows and shifts, the future of the API industry likely holds more mergers, acquisitions and investment as companies strategize in order to be competitive and relevant in the industry.