Indian API market to expand to $22 bn by 2030, at a CAGR of 8.3 pc: Report

New Delhi:  India’s Active Pharmaceutical Ingredients (APIs) market is expected to expand to $22 billion by 2030, according to a report on Monday.

The report by Praxis Global Alliance, a management consulting firm, stated that the APIs are growing at a CAGR of 8.3 pc in the country.

APIs are biologically active components in drugs that provide pharmacological activity or direct effects in disease treatment. For instance, in common medications like Crocin, paracetamol functions as the API, directly responsible for the drug’s pain-relieving properties.

The report noted that “India is also the third-largest global producer of APIs, with an 8 per cent market share and over 500 different APIs manufactured”.

“India contributes 57 per cent of the APIs on the WHO’s prequalified list. The market is expected to expand from $18 billion in 2024 to $22 billion by 2030, growing at a CAGR of 8.3 per cent,” said Madhur Singhal, Managing Partner, Pharma and Lifesciences at Praxis Global Alliance.

APIs represent a significant part of India’s pharmaceutical market, contributing approximately 35 per cent of the sector’s value.

“These crucial components account for 40 per cent of overall drug manufacturing costs on average, though this figure can rise to 70-80 per cent depending on market conditions,” Singhal said.

The expert said that although the Indian API sector is growing it faces challenges in the storage and transportation of thermolabile drugs, cold chain-dependent pharmaceuticals, and compliance with new barcoding systems.

In addition, it is also facing cost advantages of foreign suppliers; infrastructural issues; and supply chain vulnerabilities. The sector also grapples with stringent environmental regulations, especially around effluent treatment and waste management, which increase production costs and lead to negative public perception, Singhal said.

To address these challenges, the Indian government implemented several schemes such as the Production Linked Incentive (PLI) scheme (2020-30); a scheme for the promotion of bulk drug parks (2020-25), and a PLI scheme for pharmaceuticals (2020-29).

These government initiatives have led to “a notable shift in the industry landscape. Companies are increasingly investing in API production facilities to meet domestic demand and reduce reliance on imports. The segment is witnessing heightened competition for management-level executives due to the influx of private equity-owned platform companies entering the market,” Singhal said.

–IANS