1. STUDY REPORT
ON
API INDUSTRY
(Mainly Focused on Asia-Pacific Region)
For
Viwit Pharmaceuticals Co. Ltd.
China
Prepared By:
Shoaib Akhter

2. STUDY ON API INDUSTRY
SHOAIB AKHTER
AN INTRODUCTION
APIs (Active Pharmaceutical Ingredients) are an integral part of both the quality and the cost of
pharmaceutical drugs. It may be defined as substances or mixtures of substances intended to be
used in the manufacture of a drug or any medicinal product that, when used in the production of a
drug, becomes an active ingredient of that drug or medicinal product.
CLASSIFICATION OF APIs
 On the basis of Raw Material
1. Synthetic
2. Biotech
 On the basis of Production
1. Generic
2. Innovator
PRODUCTION PROCESS:
API production processes are characterized by quite a long chain of chemical transformations, where
the synthesis is arranged in two or more chains, each one giving a building block, or synthon, (Al and
Bm). Those building blocks are reacted together in order to obtain an advanced intermediate which
has the chemical skeleton of the final API. Then, functional group transformations result in the final
API. The lower the number of C type intermediates, the more convergent is said the synthesis.
Convergence is a very important characteristic of a chemical synthesis and Good Manufacturing
Practices (cGMP) have to be used only for the preparations of type C intermediates.

3. STUDY ON API INDUSTRY
SHOAIB AKHTER
MARKET OVERVIEW
 GLOBAL MARKET
 Global Market Revenue : US $ 108.61 billion (2011)
 Growth Rate : 7.3%
Expected to grow at a CAGR of around 8.0% to reach US$ 139.2 billion by 2014.
o No. of Companies : 2056
o Manufacturing Sites : 3700
Driving Key Factors for Growth
1. Emergence of India and China as prominent API manufacturing hub,
2. Patent expiration of blockbuster drugs and
3. Technological innovation to drive HPAPI segment.
 ASIA PACIFIC MARKET
Asia-Pacific is the second largest regional market for APIs by revenue in the world.
 Market Value : US$ 30.69 billion (2011)
 Growth Rate : 6.7%
 Market Share : 28.3% of global API market in 2011.
Expected to grow at a CAGR of around 9.6 % to reach US$ 63.2 billion by 2017
Figure 1 - Asia Pacific API market ($ billion), 2005-2016
70
60
50
40
30
20
10
0
2005 2011 2017
Revenue ($ Billion)
Years

4. STUDY ON API INDUSTRY
SHOAIB AKHTER
GENERIC APIs & INNOVATIVE APIs
The generic sector is the dominating one in Asia-Pacific region.
 Share of Generic APIs - 71.5 %
 Share of Innovator APIs - 28.5%
**The share of innovator sector APIs is higher in Japan and lower in China and India.
SALES VALUE
Sales of third-party generic APIs : Around $17 billion
(Expected to reach $32.5 billion in 2014)
Sales of third-party innovative APIs : Around $19 billion
(Expected to reach $21.2 billion in 2014)
Driving Key Factor for Growth
This will be supported by healthy demand from the biotech and generic API sectors
 Ongoing globalization
 Consolidation of the market
 Low wage countries
 Driving of sourcing to the Asian giants China and India
 Dramatic technological change
 Cost pressures due to high energy costs
MARKET SHARES (ASIA PACIFIC REGION)
Japan is the largest Market for APIs followed by China in Asia-Pacific Region
Figure 2 - Asia Pacific API market by country, 2010
Source: GBI Research, Chemical Pharmaceutical Association

5. STUDY ON API INDUSTRY
SHOAIB AKHTER
COUNTRIES’ COMPARATIVE ANALYSIS:
1. JAPAN
 Japan is the second largest pharmaceuticals market in the world after the US.
 Japan is also the most advanced market in the region in terms of scientific research,
technology and medical equipment.
 The intellectual property rights (IPR) protection system of Japan is also much
stronger than that of other Asian countries, giving patent protection for the new
APIs.
2. CHINA (Growth Rate: 19.3%)
 China is the world's most populous country and also has its fastest growing economy.
This is the second biggest market for APIs in the Asia-Pacific region, after Japan.
 The Chinese pharmaceuticals market is growing very rapidly, due to the rise in demand
for generic drugs.
 China is becoming an attractive market to many multinational pharmaceuticals
companies for several reasons,
 Large market size,
 Tax incentives,
 Increased government spending on healthcare,
 Government plans to restructure the fragmented industry,
 Encouraging innovation and
 Improved IPR systems.
3. INDIA (Growth Rate: 17.6%)
 India is the third largest API market in the region. Like China, India has also become a
favoured destination for offshore contract manufacturing operations thanks to its cost
advantage.
 The cost of operations in India is estimated to be 40% lower than in North American and
Western European countries.
 Manufacturing standards in India are compliant with many international regulations.
 In addition, improvements in the technological capabilities of the country have enabled
many Indian manufacturers to venture into the highly regulated markets of the US and
Europe.
COMPARATIVE ADVANTAGE – API MANUFACTURING
REGIONS: INDIA & CHINA
These countries provide –
 Cheap labor, transport and equipment cost,
 High productivity,
 Low-investment to set-up plant,
 Good profit margins and lower entry barrier
In addition, there is a set of supportive regulations that support the local manufacturing and at
the same time encourage export between nations.

6. STUDY ON API INDUSTRY
SHOAIB AKHTER
EMERGING MARKETS IN ASIA PACIFIC
Labor costs are low in countries such as Bangladesh, Vietnam, Indonesia, and Malaysia, making API
contract manufacturing feasible in these countries.
"Innovation, quality assurance, and investments in improving technologies will benefit participants in
this emerging market and help them enlarge their footprint in the global API contract manufacturing
market,"
STRUCTURE OF BUSINESS
 The Asia-Pacific API industry is dominated by the merchant market, through which the
traders sell APIs to drug formulating companies.
 Over 90% of sales take place within the merchant market.
LEVERAGING MARKET POTENTIAL
 APIs manufacturing is shifting from Western countries to China and India. They have
attracted huge investments from international companies.
 They will continue to witness important developments in the field of contract manufacturing
of APIs.
 Domestic or International formulating companies are attracted to outsource their API from
these regions due to their low labour cost.
 The regulatory environments of these Asian countries are also supportive.
EMERGING RECENT TRENDS
Transition to Biotech APIs
At present, around 85% of the APIs in the Asia-Pacific region are manufactured synthetically using
non-biological substances as raw materials, the remaining 15% biotechnologically.
Since, becoming the outsourcing hub for North America and Western Europe, the increasing demand
for biotech drugs in these regions is also driving the biotech APIs market in the Asia-Pacific region.
The governments of China and India are offering several incentives and support programs in order to
boost the growth of their biotechnology industries.
 Tax incentives,
 Establishing Biotechnology parks and
 Building Special Economic Zones
The general complex structure of a biological drug does not favour easy replication of the drug,
unlike synthetic chemical APIs, therefore offering easier IP protection and higher profit margin.

7. STUDY ON API INDUSTRY
SHOAIB AKHTER
CHALLENGES
 The biotechnology process is very sensitive and has to be controlled efficiently in order to
produce drugs with the desired therapeutic effects.
 The need for sophisticated controls and process equipment increases the capital investment
for manufacturers.
FUTURE OPPORTUNITIES
The increasing focus on biological API in treating cancer and immune-mediated diseases will also
bolster the market and cause a shift in providing “value-added” services, such as
 Highly potent APIs (HPAPIs),
 Radio-labelled APIs, and
 Antibody-drug conjugates (ADCs).
HPAPIs
High Potency Active Pharmaceutical Ingredients (HPAPIs) is expected to play a major role in the
future growth of global APIs market.
 Worldwide Market Value : US$ 9.2 Billion in 2011
 Growth Rate : CAGR of around 9% till 2015
Though biologic drugs are high-priced but have greater efficacy and safety in certain therapeutic
areas, such as oncology, the market for bio-generic biotechnology-based APIs is growing faster than
innovative biotechnology-based APIs.
MAJOR GLOBAL PLAYERS
1. Dr Reddy’s Laboratories
2. Cipla
3. Ranbaxy Laboratories
4. Zhejiang Hisun Pharmaceuticals Co. Ltd.
5. Fabbrica Italiana Sintetici
6. Cambrex Corporation
7. Pfizer CentreSource
8. Teva Active Pharmaceutical Ingredients
9. Lonza
10. Daiichi Fine Chemicals

8. STUDY ON API INDUSTRY
SHOAIB AKHTER
TARGETING STRATEGIES
1. Timing Patent Expiration
2. Mastering Complex Manufacturing
3. Targeting Programme Drugs
4. Competing in Generic Bulk Drugs
TARGET COUNTRIES
INDIA – PHARMACEUTICAL INDUSTRY
 Turnover at US$ 22 billion in 2011-12, growing @ 12%
 About 300 Large & over 10,000 SMEs
 About 77% units make Formulations and about 23% units make APIs
 Over 60,000 formulations in market covering almost every therapeutic segment with about
10 to 200 brands per molecule
 About 90% of India’s pharmaceutical market is made up of branded generics and has the
potential to grow at an accelerated 15 to 20% CAGR in the next five years.
 Patent-protected products likely to constitute 10% of market till 2015
 Ranks 3rd largest in volume (10%) and 14th (1.5%) in value in the World
OTHER INDIAN SUB-CONTINENT MARKET FOR APIs
1. Pakistan
2. Bangladesh
3. Nepal
4. Middle East
These countries are emerging big pharmaceutical drug manufacturing hub and could be an
important market for APIs.
CONCLUSION
The rapidly growing economies, increasing healthcare standards, several health insurance schemes
and rising disposable incomes, supported by large populations, are meanwhile boosting demand for
APIs in these countries.
THANKS!!!