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March 2025
The active pharmaceutical ingredients CDMO market size is calculated at USD 127.45 billion in 2024, grew to USD 136.92 billion in 2025, and is projected to reach around USD 260.98 billion by 2034. The market is expanding at a CAGR of 7.43% between 2025 and 2034. This expansion is driven by elements such as increased funding in pharmaceutical research and development, the escalating incidence of chronic illnesses, the expanding importance of generics, and the rising utilization of biopharmaceuticals.
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Contract Development and Manufacturing Organizations (CDMOs) focus on the production and development of active pharmaceutical ingredients (APIs) and provide outsourcing solutions. APIs play a vital role in the worldwide pharmaceutical supply chain, while CDMOs are essential for medicine manufacturing. The rising occurrence of chronic conditions like cancer and heart disease is fueling the need for new therapeutic alternatives. This is anticipated to drive the need for new active pharmaceutical ingredients (APIs) in the years ahead, and CDMOs play a vital role in API production. In recent decades, pharmaceutical firms have increasingly delegated a greater portion of their discovery, development, and production activities. Nonetheless, this pattern does not hold uniformly throughout the whole biopharma industry. Smaller biotech companies frequently rely on Contract Development and Manufacturing Organizations (CDMOs) to manage the production of their products during the development phases. Additionally, the increasing demand for generic drugs in countries like India and China drives the growth of the active pharmaceutical ingredients CDMO market.
AI is revolutionizing the Active Pharmaceutical Ingredients CDMO sector by enhancing efficiency, lowering expenses, and fostering innovation. It accelerates drug development by forecasting molecule behavior and minimizing trial and error. In manufacturing, AI improves processes, boosts yield, and maintains quality by analyzing data in real-time and utilizing predictive maintenance to reduce downtime. AI enables more adaptable, smaller production lots, facilitating personalized medicine. It enhances supply chain management by providing insights into inventory and predicting demand. Furthermore, AI assists in ensuring regulatory compliance through the automation of quality control. It lowers expenses by enhancing resource utilization and automating processes. In research and development, AI assists in identifying new drug formulations and uses. In general, AI improves cooperation between pharmaceutical firms and CDMOs, leading to more efficient, cost-effective, and flexible drug development and production.
Increasing Need for Generic Drugs
The increasing need for generic medications is fueling the overall active pharmaceutical ingredients CDMO market growth. These medications become accessible once the patents on branded drugs lapse, providing a cheaper option. Consequently, their low cost has caused a considerable increase in their acceptance. Furthermore, generic medications are usually 30% to 90% less expensive than brand-name ones since creating and introducing new drugs entails significant costs and time. Nations like China and India have emerged as crucial centers for the creation and manufacturing of generic medications. As reported by Healthline, China nearly monopolizes the entire generic supply in the U.S. and exercises substantial control over essential drug production and suppliers. Healthline pointed out that a significant portion of the U.S. generic drug market has moved abroad, especially to China, with only a handful of companies in the U.S. remaining in the production of generics. According to IQVIA, one of the main factors propelling the generic medicine market's development and expansion is the growing adoption of reasonably priced generics in developing pharmaceutical markets like China and India.
Challenges Related to Regulatory Compliance in Outsourcing
Outsourcing tasks may lead to the outsourcing firm losing a degree of control, which can create inefficiencies in communication and decision-making. An additional drawback is the challenge of safeguarding intellectual property when outsourcing. Businesses frequently must exchange sensitive information, which can elevate the likelihood of data breaches and the loss of essential insights into procedures. Although outsourcing contracts usually pertain to secondary intellectual property, there are occasions when primary intellectual property needs to be revealed. This fundamental intellectual property may result in possible infringement concerns, which could obstruct active pharmaceutical ingredients CDMO market expansion.
Growing Biopharmaceuticals
The expansion of fields such as biologics, biosimilars, orphan medications, personalized medicine, companion diagnostics, and adaptive clinical trial designs is anticipated to increase the demand for API CDMOs. As businesses venture into these new fields, the demand for specialized service providers with regulatory knowledge increases. The emergence of biological drugs has aided in resolving problems associated with conventional synthetic medications, which are derived from artificial chemicals absent in the human body and may lead to side effects. Consequently, biopharmaceutical firms are adopting biological methods to create therapies for more than 100 conditions, such as monoclonal antibodies, vaccines, and gene and cell treatments. The growth of biologics and biosimilars is expected to increase the demand for CDMO services in the pharmaceutical sector.
By product, the traditional active pharmaceutical ingredient segment held a dominant presence in the active pharmaceutical ingredients CDMO market in 2024. This expansion is propelled by elements such as heightened pharmaceutical R&D, an increase in chronic illnesses, greater acceptance of generics, and a rising inclination towards biopharmaceuticals. The growing adoption of advanced therapies, the creation of personalized treatments, and the emergence of novel delivery methods are anticipated to accelerate market expansion. Moreover, the tendency of large pharmaceutical firms to subcontract, particularly in traditional API CDMOs, is expected to heighten industry demand. Moreover, increasing R&D investments focused on enhancing API production methods are anticipated to boost the growth of this market segment.
By product, the antibody-drug conjugate segment is projected to show lucrative growth in the coming years. The success of antibody-drug conjugates (ADCs) and checkpoint inhibitors in treating cancer is significantly shaping the R&D landscape for ADCs. There’s also a growing interest in discovering new and innovative uses for antibody-drug conjugates. The ADC biopharmaceutical field is seeing a marked increase in R&D activities, focusing not only on combination cancer therapies but also on expanding the use of ADCs beyond oncology to target a range of non-cancerous diseases.
By synthesis, the synthetic segment held the largest share of the active pharmaceutical ingredients CDMO market in 2024. To comply with standards such as cGMP, manufacturers frequently must make significant investments in enhancing their production facilities. This includes updating production lines, educating employees on qualification criteria and procedures, and assembling a detailed file for product effectiveness and safety testing to comply with regulatory standards. Furthermore, securing regulatory approvals may be more expensive for smaller companies. The synthesis of APIs frequently necessitates costly or scarce raw materials, thereby elevating production expenses. The growth in this segment during the forecast period is anticipated to be fueled by the cost-effectiveness, time efficiencies, and specialized knowledge offered by CDMOs.
By synthesis, the biotech segment is anticipated to grow at the fastest rate in the active pharmaceutical ingredients CDMO market during the forecast period. Factors like the growing need for biopharmaceuticals and improved molecular efficiency are driving this rise. Furthermore, this segment's growth is being aided by significant expenditures in the biotechnology and biopharmaceutical industries. Although biotech active pharmaceutical ingredients now make up a small portion of the API market overall, the business is expected to expand favorably due to the biopharmaceutical sector's rapid rise and the growing use of biotech drugs.
By drug, the innovative segment held a dominant presence in the active pharmaceutical ingredients CDMO market in 2024. The robust drug pipelines of top pharmaceutical firms, combined with increasing investments in pharmaceutical research and development, are anticipated to propel growth in the innovative drug sector throughout the forecast period. As of 2024, Pfizer is advancing a robust pipeline, with 45 programs in Phase I, 28 in Phase II, 37 in Phase III, and 3 in registration. These developments span across multiple therapeutic areas, including oncology, cardiology, immunology, and vaccines, reflecting Pfizer's ongoing commitment to expanding its portfolio of innovative treatments. Current research in this area is resulting in the creation of innovative therapies, expected to be launched in the market throughout the forecast period.
By drug, the generic segment is projected to show lucrative growth in the forecast period. The expiry of brand-name medicine patents and the cost-benefit alignment of generics are major factors driving the rise of the generic pharmaceutical sector. According to the U.S. FDA, about 190 drugs are expected to lose exclusivity by 2030, which will present a significant market opportunity for generics. Importantly, 69 of these are big blockbuster medications, which is expected to fuel the generic medicine market's growth.
By application, the oncology segment led the global market in 2024. The growing number of cancer patients globally is anticipated to fuel growth in the oncology active pharmaceutical ingredients CDMO market. The number of cancer cases is expected to grow from around 18 million in 2018 to 29.9 million by 2040, according to The Cancer Atlas. This will raise the need for API services linked to oncology. According to the World Health Organization, by 2040, the number of new cancer cases per year is projected to rise to 29.9 million, and the number of cancer-related mortality rates is to 15.3 million. The market for oncology active pharmaceutical ingredients CDMO is projected to become 2.2 times itself between 2024 and 2032.
By application, the glaucoma segment is expected to show lucrative growth in the active pharmaceutical ingredients CDMO market during the forecast period. The expansion in this area can largely be ascribed to the soaring rates of diabetes, an elderly demographic, and escalating worldwide healthcare expenditures. As reported by the WHO, glaucoma ranks as the second major cause of blindness globally. Consequently, the increasing demand to lessen the effects of glaucoma is anticipated to propel market expansion in this sector in the future.
By workflow, the commercial segment held a dominant presence in the active pharmaceutical ingredients CDMO market in 2024. The increasing global prevalence of diseases is boosting the need for active pharmaceutical ingredients (APIs), stimulating expansion in this sector. As stated in a piece by the Europa Group, as of September 2023, cardiovascular disease continues to be the primary cause of mortality for both genders, impacting approximately 620 million individuals globally with heart and circulatory issues. Each year, approximately 60 million individuals are identified with these illnesses, thereby heightening the demand for CDMO services in API manufacturing to tackle the growing occurrence of chronic diseases and associated death rates.
By workflow, the clinical segment is anticipated to show lucrative growth in the coming years. One of the main factors driving growth in this market is the substantial rise in the number of compounds advancing through preclinical and clinical development, as well as increased R&D expenditures. This increase is a reflection of the need for novel treatment choices throughout the world, which has increased clinical research activity and fuelled industrial expansion.
Asia-Pacific led the global active pharmaceutical ingredients active pharmaceutical ingredients CDMO market in 2024. The regional market is expected to grow due to factors like Stronger regulatory frameworks, substantial cost-saving opportunities, increased complexity, strong drug pipelines, and increased opportunities, specifically in China, India, and Japan. Additionally, the industry is anticipated to rise due to the availability of competent labor at a lesser cost than in established nations like the U.S. Nations such as India and China dominate the global production of APIs, largely because of substantial investments in pharmaceutical research and development and the existence of well-established CDMOs across Asia.
Throughout the projection period, India is expected to have the fastest compound annual growth rate (CAGR) in this sector, with the COVID-19 pandemic underscoring the need to improve the pharmaceutical supply chain. Enhancing manufacturing skills and investing in research and development to boost domestic API production are just two of the measures the Indian government is adopting to reduce its reliance on China for APIs. India's dominance in the region is being strengthened by these activities.
China continued to have the largest revenue share in the Asia Pacific region's Active Pharmaceutical Ingredient (API) CDMO market in 2024. The country is a preferred location for pharmaceutical manufacturing because of its strong infrastructure, cost advantages, and skilled labor force. Additionally, China has strengthened its position as a major competitor in the regional and global API markets thanks to its diverse chemical and pharmaceutical production capabilities and ability to produce a wide range of APIs.
North America is projected to grow at a significant rate during the coming years. The presence of several well-known biotechnology and pharmaceutical companies is what drives North America's growth in the global market. The demand for API contract manufacturing in the region is expected to increase as a result of an increase in R&D expenditures by the pharmaceutical and life sciences industries. Furthermore, strict regulations about product quality and production standards are anticipated to create opportunities for local contract manufacturing services to thrive.
The greatest revenue share in the North American API CDMO market in 2024 was held by the United States. A high presence of well-known pharmaceutical companies, a solid regulatory framework, and substantial R&D efforts are characteristics of the U.S. pharmaceutical business. The active pharmaceutical ingredients CDMO industry is growing as a result of the high demand for outsourced API development and manufacturing services created by this environment.
Canada is expected to grow at the fastest rate in the active pharmaceutical ingredients CDMO market during the forecast period, propelled by robust pharmaceutical research and development, a supportive regulatory framework, and economical production. Canada's closeness to the U.S. market, biotechnology focus, and talented workforce are making it a major participant in the worldwide API business. These elements are anticipated to support the market's explosive growth.
Europe is expected to show lucrative growth in the forecast period. Europe is a crucial region with cutting-edge technology and a sophisticated infrastructure that improves patient care and healthcare facilities. Significant changes are anticipated to the EU's regulatory structure, which may affect market access. Nevertheless, because of stringent regulations, the industry is still expected to expand considerably. API production must adhere to EU-compliant Good Manufacturing Practices (GMP) to be imported into Europe. Furthermore, the market is anticipated to increase in the next years due to the presence of well-established companies and robust production capabilities.
Germany is projected to maintain the largest portion of the European pharmaceutical CDMO market in 2024, owing to its excellent reputation for quality manufacturing, a robust regulatory environment, a talented workforce, and an emphasis on research and development. All these elements together enhance Germany's strategic supremacy in the European market.
In 2023, Germany topped the pharmaceutical CDMO market in Europe, achieving total earnings of 69 million euros. The nation advantages from an extensive group of skilled scientists and researchers, fueling innovation in medication development and intricate manufacturing methods.
Throughout the projected period, France is expected to have strong CAGR growth in the European pharmaceutical CDMO industry. France's extensive pharmaceutical business generates over 46 billion euros in revenue, making it the second-largest market in Europe. Additionally, the country boasts a robust workforce in research and development (R&D). Government policies aimed at enhancing healthcare access also support the market's growth. Furthermore, the presence of well-known pharmaceutical companies like Sanofi, Servier, and Janssen significantly boosts France's financial growth in the sector.
Assam became a significant pharmaceutical hub in India in February 2024 when Chemex Global opened a state-of-the-art pharmaceutical API manufacturing plant in Guwahati. It is anticipated that the facility will accelerate company growth in strategic areas such as Southeast Asia, Hyderabad, Sikkim, and Gujarat.
By Product
By Synthesis
By Drug
By Workflow
By Application
By Region
March 2025
March 2025
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March 2025