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India Active Pharmaceutical Ingredients Market Growth is Accelerated by Increasing Generic Drugs Manufacturing

India Active Pharmaceutical Ingredients Market Growth is Accelerated by Increasing Generic Drugs Manufacturing

The active pharmaceutical ingredients (API) are the component of any drug that produces its effects. India is one of the leading producers of generic drugs and active pharmaceutical ingredients globally. The APIs are cost-effective and widely used in antibiotics, anti-infective, anti-diabetes, and cardiovascular drugs. The rising prevalence of chronic diseases and growing geriatric population propel the demand for affordable drugs, boosting the active pharmaceutical ingredients market in India.

The India Active Pharmaceutical Ingredients Market is estimated to be valued at US$ 29 billion in 2023 and is expected to exhibit a CAGR of 21% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Opportunity:

India imports over 65% of its total API requirement primarily from China and other Asian countries. However, due to increasing trade tensions, the dependence on other nations poses a risk to India's drug security. India has realized this challenge and aims to reduce its API imports to 0-25% by 2024 under its "Make in India" campaign. This emphasis on self-reliance creates significant opportunities for Indian domestic API manufacturers to cater to the expanding local demand and reduce import dependency. By enhancing local production capacities, developing industrial clusters, and supporting research and development activities, India can achieve its goal of becoming a global API hub. This opportunity can propel the growth of the active pharmaceutical ingredients market in India over the forecast period.

Porter's Analysis

Threat of new entrants: The threat of new entrants in the India active pharmaceutical ingredients market is moderate. Stringent regulatory approvals and compliance requirements pose a significant barrier for new companies. However, growing generic drug opportunities attract new players in certain therapeutic segments.

Bargaining power of buyers: The bargaining power of buyers in the India API market is high. Large pharmaceutical companies negotiate prices down and demand high quality and timely delivery. They can also threaten to change suppliers if prices or quality do not meet requirements.

Bargaining power of suppliers: The bargaining power of suppliers is moderate. While there are many API manufacturers, key ingredients are specialized requiring large investments. Suppliers also depend significantly on a few largest buyers.

Threat of new substitutes: The threat of new substitutes is low. APIs have limited substitutes for specific drugs. Developing alternative sources requires significant R&D investments and clinical approvals.

Competitive rivalry: The competitive rivalry is high due to presence of several domestic and global players. Players compete based on quality, reliability of supply, pricing and customer relationships.

SWOT Analysis

Strengths: India has a large pool of pharmaceutical talents and a well-established generic drug industry. The country accounts for 20% of global generics exports. Lower production costs compared to western countries.

Weaknesses: High dependence on imports for key starting materials and key intermediaries from China. Limited in-house R&D capabilities and investments compared to MNCs. Quality compliance and consistency issues at some domestic facilities.

Opportunities: Growing demand for generics and biologics worldwide presents new business opportunities. India aims to reduce import dependence and become a global API manufacturing hub. Emerging new therapies in chronic diseases attract ongoing investments.

Threats: Stringent environmental regulations increase compliance burden and costs. Oversupply of certain APIs exert pricing pressures. Ongoing trade conflicts and protectionism affect global supply chains.

Key Takeaways

The India Active Pharmaceutical Ingredients Market Size is expected to witness high growth over the forecast period of 2023-2030 supported by a growing domestic pharmaceutical industry and rising exports. The Indian government aims to make the country a global API manufacturing hub by reducing import dependence through various initiatives under the 'Pharma Vision 2020' plan which promotes domestic production. The India Active Pharmaceutical Ingredients Market is estimated to be valued at US$ 29 billion in 2023 and is expected to exhibit a CAGR of 21% over the forecast period 2023 to 2030.

Regional analysis indicates that the southern region dominates the Indian API market currently owing to presence of a large number of domestic and global players. Top API producers like Dr. Reddy's, Aurobindo Pharma and Hetero Group are based in Hyderabad and contribute significantly to the region’s lead. However, states like Gujarat and Himachal Pradesh are emerging as fast growing hubs for API production due to proactive government support through incentives and infrastructure development initiatives.

Key players operating in the Indian active pharmaceutical ingredients market are Dr. Reddy's, Sun Pharmaceutical Industries, Aurobindo Pharma, Divi's Laboratories, Hetero Labs and Glenmark Pharmaceuticals. These companies cater to both domestic demand as well as international export markets. They aim to strengthen their position through continuous investments in capacity expansion.

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