Small Molecule API Market is Anticipated to Register at a Healthy CAGR of 4.9% During 2017 – 2027

Future Market Insights

A FMI study titled “Small Mole API Market” has highlighted that small molecule APIs continue to dominate the pharmaceutical market with fast U.S. FDA approvals for small molecule APIs in 2017. Small molecules are chemical substances composed of two or more atoms with molecular weight of less than 900 Dalton. In this report, the small molecule API segment is further categorized into standard API and high potency APIs. The U.S. FDA approved 34 new small molecule API entities in 2017. Growing accessibility to drugs and essential healthcare are fuelling the demand for small molecule API entities globally. Capacity of manufacturing is the single most important factor that holds back revenue the growth of the small molecule API market. Other restraining factors of the small mole API market include faulty standards in quality, flexibility of manufacturing, customer service and reliability.

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Industry leader Cambrex believes that the small molecule API market is witnessing an all-time high growth. The small molecule API market is large, very fragmented and there is growing trend of outsourcing. The major manufacturers of small molecule API note that the outsourced market accounts for over 50% of the small molecule API market in revenue terms. The small molecule API manufacturers are present mostly in North America, Europe and Asia Pacific. So are the contract manufacturers for small molecule APIs.

Small molecule APIs constitute ~65% of all pipeline drugs under development with leading drug regulators. Small molecule APIs in development have increased by 6% in 2017 over 2016. Small molecule APIs are rapidly advancing into late stages of development, which is increasing the demand for fill-finish contract manufacturing organizations. Furthermore, contract manufacturing and developing organizations specialized in small molecule APIs are making strategic investments to expand their service offerings for big clients. For example, contract manufacturing organizations are becoming a “one-stop-shop” for both small molecule APIs and finished forms in development and commercialization.

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This helps to maximize the synergy derived from the deals for more strategic partnerships between small molecule API manufacturers and others to keep predicting volumes and manufacturing requirements in check and visibility from an early stage. Pharma companies benefit when they are able to source small molecule APIs and finished dosage from a single CMO/CDMO. This minimizes the cost and complexity of the overall product, potentially reducing the time to market.

Increasing competition from local players is deterring the manufacturing of small molecule APIs. High competition from local small molecule API manufacturers is influencing the growth of the small molecule API market and is affecting the quality of the small molecule API produced. Increasing competition from local small molecule API manufacturers in terms of price is ultimately decreasing the profitability of multinational branded small molecule API manufacturers including small molecule manufacturing CMOs. As result, the captive small molecule API manufacturers are losing grounds in the Asian countries. These companies are facing challenges in terms of profitability and product margins.

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Changing regulatory dynamics are hampering the growth of the small molecule API market. Supply chain security issues, facility contamination issues that could alter potency levels of small molecule APIs are leading to facility closures across emerging countries. This has a large impact on the cost of finished dosages of these small molecule APIs. The new entrants willing to enter into small molecule API manufacturing are facing financial challenges owing to aforementioned factors. This makes the market entry a costly decision for small and medium small molecule API manufacturers and contract manufacturing organizations. Such changing regulatory dynamics are hampering the growth of the small molecule API market in emerging countries.

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