The market for active pharmaceutical ingredients is becoming increasingly globalized. Analysts estimate up to 50 percent of active ingredients now being used in the United States to make pharmaceutical products are sourced from India and China. This figure is expected to hit 80 percent in 10 years.

Pharmaceutical firms that have traditionally made most of their own APIs have recently outlined plans to outsource them – mostly from India and China. Both countries have several first rate active pharmaceutical ingredient manufacturers who meet or even exceed Western standards. With Indian API companies firmly planted in the global fine chemicals and custom manufacturing arena, they are starting to look beyond their borders for investment opportunities. Acquiring manufacturing in the US or Europe also allows Indian companies to offer customers a ‘nearshore/offshore’ option

  • The Indian pharmaceutical sector has made the country self sufficient in almost all the 300 essential drugs through indigenous process technology. It caters to around 10,000 formulations meeting more than 90 % of the total API requirement of the domestic industry.
  • Indian companies manufacture 85% of the active pharmaceutical ingredients (API) required by the country and account for 90% of the pharmaceutical exports
  • The Indian API manufacturing industry is the third largest in the world and is expected to generate sales of $4.8 billion by 2010, at an average yearly growth rate of 19.3 per cent, according to a study conducted by Italy's Chemical Pharmaceutical Generic Association.
  • Exports of API from India are expected to touch $10 billion by 2010
  • Out of India’s Rs 44,000 crore Pharma market, around 15-20% is accounted for by APIs.
  • The impeccable quality standards maintained by the Indian firms are illustrated through the number of manufacturing facilities certified by the world's leading regulatory authorities. Besides the largest US FDA approvals outside the US, India has 19 facilities recognized by TGA, Australia; 45 plants by MCA, South Africa and three certified by EDQM (Europe).India has 40 USFDA approved API plants
  • India's APIs have hardly left any location untouched in the world, though the regulated markets in the major 20 countries remain pillars contributing 60% of the total exports.
  • Twenty leading players in API sector has recorded an impressive 29% growth in the quarter ended March 31, 2006, according to a study by Cygnus Research, Hyderabad.
  • India exports to about 220 countries. APIs export has increased by 8%, (API exports account to about 7,780 crore ) demonstrating its potential as a sustainable business model.  India has become the second largest market for pharmaceutical products and ingredient exports from China, next to the USA.
  • Indian firms counter the Chinese challenge through developing cost-effective solutions without compromising quality.
  • Early entry and development of non-infringing processes for products with complex patents hold the key to developing a profitable API product pipeline. Pipeline and product concentration remain the key vulnerable areas for most API manufacturers.
  • The rush of international acquisitions by the leading Indian pharmaceutical firms marks the latest phase in the Indian API scenario.
  • The heightened merger and acquisition activity in the generics industry would continue to sustain momentum with several global majors viewing India as a key manufacturing destination.

Some of the key drivers for the increase in demand of pharmaceutical intermediates are:

  1. New drug development pipelines in different therapy areas
  2. Drug patent expirations releases opportunities – advent of generic drugs
  3. Demand for innovative therapies and manufacturing technologies
  4. Increased pharmaceutical R&D spending
  5. Outsourcing of intermediate production

Some of the players are:

  1. Aurobindo Pharma
  2. Dishman Pharma,
  3. Divi`S Laboratories Limited
  4. Dr Reddy Lab
  5. Glaxosmithkline
  6. Hetero Ltd
  7. Innovasynth Technologies
  8. Jubilant Organosys Ltd
  9. Matrix Laboratories,
  10. Navin Fluorine
  11. Nectar Lifesciences Ltd (Neclife)
  12. Neuland Laboratories
  13. Nicholas Piramal India Limited
  14. Orchid Pharmaceuticals,
  15. Ranbaxy Ltd
  16. Shasun Chemicals
  17. Strides Arcolabs
  18. Sun Pharmaceutical Industries Ltd
  19. Suven Pharma,
  20. Virchow