India's API market to hit $22 bn by 2030: Report

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

A report by Praxis Global Alliance, a management consulting firm, reveals that India's Active Pharmaceutical Ingredients (APIs) market is growing at a compound annual growth rate (CAGR) of 8.3%.

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 percent market share and over 500 different APIs manufactured.”

“India contributes 57 percent 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 percent,” said Madhur Singhal, Managing Partner, Pharma and Lifesciences at Praxis Global Alliance.

APIs account for around 35% of India's pharmaceutical market value, playing a substantial role in the sector.

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

Despite growth, India's API sector faces numerous challenges, including storing and transporting temperature-sensitive drugs, adapting to new barcoding systems, and competing with foreign suppliers' cost advantages.

Additionally, the sector struggles with infrastructural issues, supply chain vulnerabilities, and stringent environmental regulations, particularly regarding effluent treatment and waste management, which drive up production costs and harm public perception.

To overcome these challenges, the Indian government has introduced initiatives like the Production Linked Incentive (PLI) scheme, the Bulk Drug Parks scheme, and the PLI scheme for pharmaceuticals.

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.

(inputs from IANS)