Market Overview

The domestic API (active pharmaceutical ingredient) and intermediate market for FY2023 (based on the domestic production value, except for in-house production at pharmaceutical companies) is projected to rise by 1.6% from the previous fiscal year to 508,000 million yen.

The domestic API and intermediate market has been steady because of robust demand for APIs and intermediates for small molecule drugs and because of pharmaceutical companies have continued relying on the outsourcing of drug manufacturing. Furthermore, APIs and intermediates for the areas of highly active pharmacological substances to manufacture anticancer drugs, middle molecule drugs such as nucleic acid drugs, and biomedicine are projected to expand the market.

On the other hand, those factors of expanding costs for manufacturing and quality controls to assure reliability, for transportation as well as for raw materials, and increasing vagueness in transition probability from drug development to commercialization may deteriorate the revenues in the API and intermediate market. In addition, quality control and stable supply tend to be ever significant than before at pharmaceutical companies, bringing about a movement by API and intermediate companies to seek domestically produced APIs and intermediates as well as to grope for multiple-sources for procurement.

Noteworthy Topics

Proactive Investment by API & Intermediate Companies

In order to respond to robust demand for APIs and intermediates, some companies have shown their moves to reinforce their production facilities.

As demand for highly potent APIs and intermediates keeps on expanding, increasing numbers of API and intermediate companies have planned or performed to newly build or extend their manufacturing facilities. Deployment of equipment to deal in new modality medicines such as nucleic acid drugs is also underway.

Furthermore, aiming to meet diverse needs for APIs and intermediates, including at venture companies and academia (public R&D institutions), some companies endeavor to differentiate themselves from others by newly building or extending into highly flexible production facilities such as multipurpose production facilities or those that can manufacture small volume of products.

Future Outlook

CAGR of the API and intermediate market from FY2023 to FY2027 is projected to be 2.5%. Against the backdrop of the necessity for stable supply of APIs and intermediates, and growing outsourcing of drug manufacturing at pharmaceutical companies, the domestic API and intermediate market is on the rise. While new modality medicines including middle molecule drugs and biomedicine are emerging, stable demand for APIs and intermediates geared to small molecule drugs is expected to continue.

Research Outline