Indian API industry stands at threshold of transformation

THE active pharmaceutical ingredients (API) industry in India stands at the threshold of a transformation with backward integration and reduced import dependence, growth in high-value, niche APIs, improved regulatory compliance and quality focus, sustainability & Green API manufacturing, digital & virtual API supply chain models, opine experts.

- Nandita Vijayasimha, Bengaluru

The API industry in the country is at a watershed moment, impacted by global supply chain dynamics, shifting regulatory landscapes, and the desire for self-reliance. Traditionally reliant on imports, especially from China, India has made significant strides in boosting its domestic API manufacturing capabilities.

The PLI (production linked incentive) scheme has spurred investments in critical APIs and key starting materials (KSMs), reducing our dependence on imports. This is a very strategic initiative because APIs are the lifeline of the pharma sector, and India supplies nearly 20 per cent of the global API needs.

However, even as there are advancement, raw material costs, environmental laws, and compliance are a few of the significant impediments. Companies that embrace newer process technologies, sustainability, and high-value API segments will be well positioned to succeed.

To combat supply chain risks, Indian API manufacturers are investing in the domestic production of intermediates and KSMs. This will reduce the reliance on imports and ensure a cost-competitive, stable supply chain. Some of the larger pharma players are establishing greenfield API plants to enable this transition.

The market is moving away from commodity APIs to niche, high-margin segments like orphan & rare disease APIs with a growing focus on personalized medicine. Even peptides and biosimilars of high value, complex segments are gaining traction. Besides, oncology APIs are growing in demand. Investment in these APIs with high barrier to entry can compensate investors with strong pricing power and longer-term growth.