Challenges in Transparency and Control Hamper Merchant API Market Growth Despite Pharmaceutical Industry Expansion

DUBLIN, Nov. 10, 2023 /PRNewswire/ -- The "Global Merchant API Market (by Molecular Type, Segment, Type, Type of Synthesis, End-User, & Region): Insights and Forecast with Potential Impact of COVID-19 (2022-2027)" report has been added to ResearchAndMarkets.com's offering.

The global merchant API market is on track to achieve a market value of US$90.97 billion by 2023, with a notable Compound Annual Growth Rate (CAGR) of 6.97% over the forecast period. The merchant API value chain encompasses all activities related to the development and manufacture of active pharmaceutical ingredients (API) for clinical trials and commercial products.

Understanding Merchant API

Merchant API (contract manufacturing) plays a vital role in the pharmaceutical and biotech industries, where specialized entities collaborate with pharma and biotech companies, especially smaller ones, to develop and manufacture API for clinical trials and commercial products. Pharmaceutical companies are increasingly outsourcing manufacturing to focus on core competencies like research and development (R&D) and marketing, contributing to the growth of the merchant API market.

Market Segmentation

The global merchant API market is segmented as follows:

1. Molecular Type: This segment is divided into Small Molecules and Large Molecules. Small molecules currently hold the largest market share due to the growing demand for small-molecule drugs and the outsourcing trend. The Large Molecules segment is expected to grow rapidly due to a strong pipeline, increasing therapy and vaccine complexity, and the maturation of biotech projects entering late-stage development and commercial launches.
2. Segment: The market is segmented into CDMO (Contract Development and Manufacturing Organization) and API Solutions. CDMO holds the highest market share and is projected to be the fastest-growing segment. Within CDMO, Small Molecule and Large Molecule segments are further analyzed. Small molecules dominate, while Large Molecule is expected to experience rapid growth. CDMO is also analyzed based on end-users, with Peptides, Oligos, and Others being key categories.
3. Type: This segment includes Innovative API and Generic API. Generic API is expected to be the fastest-growing segment, driven by rising demand for biopharmaceutical therapeutics and patent expirations of drugs, leading to increased generic production capacities.
4. Type of Synthesis: The market is divided into Synthetic and Biotech synthesis. Synthetic molecules are cost-efficient, time-saving, and effective for treating various diseases. The specialized expertise offered by CDMOs is expected to drive the growth of synthetic molecules during the forecast period.

Geographic Insights

The global merchant API market is divided into four regions: North America, Asia Pacific, Europe, and the Rest of the World (ROW). North America leads the market, with pharmaceutical manufacturers increasingly outsourcing raw material procurement and manufacturing activities to CDMOs to remain competitive. India and China are preferred regions for contract manufacturing outsourcing due to cost-effective skilled labor, favorable government policies, tax benefits, and improved trade relationships.

Drivers: Increasing Incidence of Diabetes

The rising incidence of chronic diseases due to urbanization, lifestyle changes, and population growth drives the demand for drugs. Merchant API manufacturers play a crucial role in meeting the demand for branded and generic drugs, especially in developing countries. This trend has fueled the growth of the merchant API market.

Challenges: Lack of Transparency and Loss of Control

One common manufacturing challenge faced by pharmaceutical companies is the lack of transparency when issues arise during contract manufacturing. Identifying the source of problems becomes challenging, and outsourcing may result in reduced visibility and control over the production process. This can lead to knowledge loss, supply chain issues, and shipping challenges, hindering market growth.

Trend: Growing Use of Artificial Intelligence

Artificial Intelligence (AI) processes enhance API production accuracy and standardization. Machine learning can optimize critical process parameters in real-time, reducing hold times between production stages. Integrating AI into API manufacturing processes helps companies overcome challenges and is expected to drive market growth.

COVID-19 Impact

The global merchant API market experienced slower growth in 2020 due to lower pharmaceutical demand in several areas, reduced doctor visits, and new diagnoses. However, some contract manufacturing organizations saw increased demand related to COVID-19 vaccine and therapeutic projects. A spike in demand for novel drugs led to higher API manufacturing, import, and export, resulting in average price increases for API products and intermediates. Favorable government policies are expected to support API production in the long run, contributing to market growth post-COVID.

Key Players

The global merchant API market is highly fragmented, with key players including Thermo Fisher Scientific Inc., Pfizer Inc. (Pfizer CenterOne), Sanofi (EuroAPI), Teva Pharmaceutical Industries Ltd. (Teva API), Bachem Holding AG, Siegfried Holding AG, Divi's Laboratories Limited, Centrient Pharmaceuticals, Lonza Group AG, Cambrex, Fabbrica Italiana Sintetici, and PolyPeptide Group AG.

Top Impacting Factors

Growth Drivers

• Increasing Incidence of Diabetes
• Increasing Research and Development Spending
• Growing Pharmaceutical Industry
• Growing Pharma Outsourcing Trend

Challenges

• Strict Laws and Regulations
• Lack of Transparency and Loss of Control

Trends

• Growing Use of Artificial Intelligence
• New Drug Approvals
• Increasing Patent Expiry
• Growth of the High-potency Active Pharmaceutical Ingredients (HPAPI)

For more information about this report visit https://www.researchandmarkets.com/r/v2dm8j

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