Indian API industry: Emerging trends and road ahead

Despite having the third-largest pharmaceutical industry by volume in the world and being the largest manufacturer of generic medicines globally, India is heavily dependent on China for imports of raw materials, Key Starting Materials (KSMs), and Active Pharmaceutical Ingredients (APIs). India is the source of around 60,000 generic brands across 60 therapeutic categories and manufactures more than 500 different APIs.

However, India imports about 70 per cent of its APIs from China as it’s a cheaper option than manufacturing them domestically. There were 58 APIs in which India was heavily dependent on China. In the case of 45 APIs, India was dependent on China for 100 per cent of imports. Out of these 58 APIs, 29 APIs are manufactured through fermentation and 29 APIs are manufactured through chemical synthesis.

The Indian API industry is going through a challenging phase for a long time because of high dependence on China, which accounts for the bulk of the total imports. Because of this, API prices have been very volatile and we have seen prices of APIs going up by more than 100 per cent in the recent past.

High dependence on a single source can have a significant adverse impact in emergency-like situations. It is time for India to revive its domestic API industry, which has been deeply affected because of policies such as stricter implementation of pollution control norms, implementation of DPCO, 2013, lower import duties.

Going forward would recommend the Indian API firms to possibly look at the following emerging business segments as a part of their future growth strategy:

API segments of future
Fermentation based
The pharmaceutical industry is no stranger to fermentation. Synthetic biology has been used for the production of both biologic and chemical APIs for decades. The greater sustainability and ability to access novel structures provided by fermentation processes are driving greater interest, particularly for small molecules.

Key advantages of fermentation
Cell culture, while often more suited for the production of biologics, such as proteins and monoclonal antibodies, is more expensive and often more complex Microbial fermentation tends to be, more straightforward and scalable.

In addition, fermentation often involves the conversion of cheap and readily available raw materials (sugar or other cheap substrates) into high-value products with high yields/s, ensuring the commercially viable manufacture of high-quality products, Operators benefit from safer work environments, and drug makers avoid issues associated with the use and production of hazardous materials. Fermentation facilities and equipment may also be less costly to build and install.

Synthetic biology can in some cases also provide access to molecules that cannot be produced via traditional synthetic organic chemistry. Similarly, some phytochemicals that cannot be practically extracted from plant sources may also be produced via fermentation. There are also decades of fundamental research and proven manufacturing success supporting the growing interest and application of synthetic biology and fermentation for chemical API production.

High potent APIs
Typically, an API is classified as a high potency API (HPAPI) if it has an occupational exposure limit at or below 10 micrograms per cubic meter of air. A high potency API (HPAPI) or highly potent compounds are known for their ability to target diseased cells more precisely and selectively than other APIs. High-potency APIs are highly effective at much smaller dosages and hence, much more efficient in the cure of some diseases than other non-potent APIs.

High potency APIs (HPAPIs) are thus extremely effective pharmacologically active pharmaceutical ingredients. They are highly specific in their action and offer significant efficiency even at low daily therapeutic doses. Furthermore, high-potency active pharmaceutical ingredients (HPAPIs) have the ability to target precise disease cells and are, hence, used in formulations for highly potent drugs.

These are most commonly used in hormonal drugs which are used for the treatment of breast cancer. Glaucoma is the other most important application of a highly potent active pharmaceutical ingredient (HPAPI). A highly potent active pharmaceutical ingredient (HPAPI) or highly potent compounds are also found in cardiovascular drugs, central nervous system drugs and musculoskeletal drugs.

The Global High Potency APIs (HPAPIs) market size was valued at approximately US$ 21.2 billion in 2023 and is expected to reach around US$ 39.5 billion by 2032, growing at a compound annual growth rate (CAGR) of 7.2 per cent during the forecast period.

The growth of the HPAPIs market is primarily driven by the increasing prevalence of cancer and hormonal disorders, where HPAPIs are extensively used in treatment regimens. The focus on targeted therapy and personalized medicine is also creating substantial demand for HPAPIs, given their potency and specificity in action.

One of the major growth factors for this market is the rising incidence of chronic diseases such as cancer and cardiovascular disorders. The development of innovative HPAPIs for targeted therapies has substantially improved the efficiency and reduced the side effects of treatments, making them highly preferred in modern medicinal practices. Moreover, technological advancements in manufacturing processes have significantly enhanced the production efficiency and quality of HPAPIs, thereby reducing costs and making these drugs more accessible to a broader patient population.

Many contract manufacturers (e.g. CDMO, CMO) are also building new facilities that are designed specifically for the development and production of potent active pharmaceutical ingredients (APIs), which require an investment of millions of dollars beyond typical GMP (good manufacturing practices) production facilities.

This investment may include specialized facilities for HPAPI–antibody conjugations that incorporate both hi-potent-compound handling and biologics processing capabilities.

The other key factor driving the market is the increasing investment in research and development(R&D) by pharmaceutical companies. This is leading to the development of new and more effective HPAPIs. Companies are focusing on expanding their product pipelines with novel HPAPIs that address unmet medical needs, particularly in oncology and hormonal disorders.

The growing trend of outsourcing HPAPI manufacturing to specialized contract manufacturing organizations (CMOs) is also contributing to market growth, as it allows pharmaceutical companies to focus on core competencies while ensuring high-quality production standard

Considering the high demand in this segment many leading pharmaceutical companies are strategically investing in HPAPI manufacturing infrastructure and R&D to bolster their HPAPI pipelines. Due to their wide range of potential uses and benefits for patients, the growth in the HPAPI market is likely to outpace the overall API market.