Active Pharmaceutical Ingredient (API) Market Size, Share, Growth, Trends, and Global Industry Analysis: By Type of Synthesis (Biotechnological, Synthetic, Semi-Synthetic), By Application Area (Cardiovascular System, Oncology, CNS & Neurological System, Orthopaedic, Endocrinology, Pulmonology, Gastrointestinal System, Nephrology System, Ophthalmology, Others) and Region Forecast 2020-2031

Active Pharmaceutical Ingredient Market size was valued at US$ 170.3 billion in 2024 and is expected to reach US$ 286.2 billion by 2031, growing at a significant CAGR of 7.7% from 2025-2031. Factors such as increased drug R&D, the rising incidence of chronic diseases, the growing importance of generics, and the rising consumption of biopharmaceuticals are all driving market expansion. Unfavorable medicine price control rules in several countries, as well as high production costs, are projected to limit the market's expansion. Government regulations that encourage API development, as well as changes in geopolitical situations, are propelling the market forward. The API market is facing significant changes as a result of COVID-19's supply chain disruption. Due to geopolitical circumstances and a desire to lessen reliance on China for API products, countries such as India are being favored over China for API export.

An active pharmaceutical ingredient (API) is a part of the drug that produces a pharmacological effect. Some drugs such as combination therapy have multiple active pharmaceutical ingredients (API) to treat different symptoms in different ways. APIs provide health benefits and play a vital role in prevention, treatment and diagnosis. Active Pharmaceutical ingredients may be synthesized by a chemical process, biotechnological process, and various other processes. Active pharmaceutical ingredients used for making a wide range of drugs that used to treat chronic diseases such as cancer, metabolic disorders, cardiovascular disorders, and neurological disorders, and others.

Some market players manufacture their own API and others buy from other API manufacturing companies to make drug formulations. Active pharmaceutical ingredient (API) market is driven by various factors such as the increase in the incidence of chronic diseases, and penetration of healthcare systems in underdeveloped countries increased the consumption of drugs are expected to fuel the growth of API market. Furthermore, a surge in healthcare spending, development of healthcare infrastructure around the world enables boost the active pharmaceutical ingredients market growth. However, unfavourable drug pricing policies in some countries and stringent regulatory requirements are hampering the market.

Key Developments:

• In August 2025, AbbVie announced a $195 million investment to expand active pharmaceutical ingredient (API) production at its North Chicago, Illinois manufacturing plant. The expansion is part of the company’s broader commitment to invest over $10 billion in the U.S. to support innovation and enhance critical manufacturing capabilities and capacity.
• In July 2025, under India’s Production Linked Incentive (PLI) Scheme to boost domestic manufacturing of critical Key Starting Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs), 48 projects were approved. The initiative seeks to reduce dependence on single-source imports and prevent supply disruptions for essential APIs. By December 2024, investments had reached ?4,254 crore—surpassing the committed ?3,938.5 crore—with cumulative sales of ?1,556 crore, including ?412 crore in exports. The scheme has avoided imports worth ?1,144 crore and established domestic capacity for 25 identified KSMs, DIs, and APIs.
• In September 2024, Wanbury announced the launch of its new active pharmaceutical ingredients (API) portfolio for FY24-25, covering therapeutic areas such as anti-diabetics, antidepressants, anti-histamines, analgesics, anti-inflammatory drugs, antitussives, and anaesthetics. The upcoming product lineup includes high-demand APIs like Sertraline HCl, Diphenhydramine HCl, Diphenhydramine Citrate, and Metformin HCl, with global market requirements estimated at 61,400 MT for Metformin HCl, 650 MT for Sertraline HCl, 291 MT for Diphenhydramine HCl, 1,469 MT for Mefenamic Acid, and 556 MT for Tramadol.
• In January 2024, Teva announced plans to divest its active pharmaceutical ingredient (API) business, TAPI, a global leader in the small-molecule API industry with around 4,300 employees worldwide. The move aims to optimize revenue streams, reallocate capital toward growth and innovation, and enhance patient services. The divestiture is expected to create added value for shareholders and stakeholders while enabling the standalone company to pursue new growth opportunities in the $85 billion global API market.