Developments and trends in the field of APIs

1. Industry overview

API (Active Pharmaceutical Ingredients), directly translated as the active ingredient of the drug, is the basic substance that constitutes the pharmacological action of the drug. API can not be used directly for patients, need to be purified, add excipients and other links to further processed into preparations, in order to be taken directly by patients. Intermediates are produced in the process steps of APIs, and must undergo further molecular changes or refinement to become a material of APIs, broadly speaking, the API industry includes APIs and intermediates.

According to Mordor Intelligence data, the global API market size of $175 billion in 2020, the global demand for APIs is expected to maintain growth in the next few years, the market will rise to $245.9 billion by 2026, with a compound annual growth rate of more than 5.8%.

2. Trend of development

(1) Gradual expiration of patents of some heavyweight drugs, API industry may usher in rapid development

At present, one of the important development trends in the global pharmaceutical market is that many heavyweight drug patents will expire one after another, and the high risk and high return of new drug research and development determines the high profitability of new drugs during the patent protection period. However, once the patent of an innovative drug loses its protection, its selling price will drop significantly under the impact of low-cost generic drugs. At that time, the importance of the cost of APIs will begin to appear, accounting for a substantial increase in the proportion of the final price of drugs, and become one of the decisive factors in the profitability of the original research and generic drug manufacturers.

Under the financial pressure, OEMs are more inclined to seek professional pharmaceutical outsourcing in order to achieve process optimization and cost reduction, while generic pharmaceutical companies hope to seize this opportunity to break the monopoly of traditional European and American pharmaceutical companies and rapidly expand their market share.

According to Evaluate pharma, the patent expiration of innovative drugs will peak in 2022, with $40 billion worth of drugs affected and a potential revenue loss of $16 billion, and the total sales of drugs with patent expiration from 2020 to 2024 are expected to reach $159 billion. The expiration of a large number of patented drugs will drive continued growth in the international generic drug market, which in turn will lead to a continued increase in demand for APIs.

At present, Europe, the United States, Japan and other developed countries in the government's advocacy and support, the market share of generic drugs has reached more than 50%, and maintain a rapid growth rate of about 10%, which is twice as fast as the growth rate of innovative drugs. The United States is the country with the highest substitution rate of generic drugs, and the medical policy of European countries is generally in favor of the development of generic drugs.

Among them, France, Spain, Italy and Portugal are the four countries where the market share of generic drugs has increased significantly. Overall, the global generic drug market is expected to maintain double-digit compound growth, of which China and other emerging countries account for the gradual increase. The increase in the use of generic drugs will bring prosperity to the API market. In particular, for developing countries with limited ability to pay, generic drugs will remain the main choice for clinical use for some time to come.