The active pharmaceutical ingredient (API) landscape is shifting. Companies are rethinking their sourcing strategies, upgrading their technological capabilities, and relying more heavily on CDMOs that can deliver resilience, specialism, and speed.
In 2024, FDA biosimilar approvals reached a record 19, and Q1 2025 saw 10 biosimilar approvals, including both new biosimilars and expanded indications for existing ones. While the market is still dominated by small molecules, modalities such as ADCs, peptides, oligonucleotides and viral-vector substances are increasingly shaping investment priorities.
Key factors shaping the API market
Global API supply remains heavily concentrated in China and India. Around the world, pharmaceutical companies continue to contract a significant proportion of their manufacturing to these regions. Recent closures of European chemical plants have sharpened sovereignty concerns across the EU, prompting renewed political attention to medical security and regional capabilities.
Geopolitics is now embedded in the design of supply chains, and US tariffs coupled with export-control measures are pushing companies to reshore, friend-shore, or introduce redundancy into their supplier networks. For markets accustomed to basing decisions solely on cost optimisation, this is a significant shift. Notably, these pressures have encouraged major Asian manufacturers to move up the value chain. Instead of withdrawing, they are increasing the production of more complex APIs and high-potency substances.
This is occurring while demand is rising, with ageing populations, increased prevalence of chronic disease, and long product lifecycles continuing to fuel the need for traditional small molecules. Biologics and newer modalities are also advancing rapidly across both clinical development and approval pathways, as evidenced by the 14-15 antibody-drug conjugates (ADCs) that reached approval by late-2024. This shift has already encouraged CDMOs to invest heavily in high-potency, ADC and contained facilities, targeting participation in a market now estimated at around $9bn.
The looming 2027–28 patent cliff adds further complexity, with a surge in generic launches expected to boost demand for both commodity and complex APIs just as originators funnel capital into next-generation, high-value pipelines.
The therapeutic areas driving capacity shifts
A decade ago, global API demand was dominated by traditional, high-volume small molecules such as oncology agents or antivirals. Today, demand is spread across biologics, oligonucleotides, peptides, viral vectors and radioligands that require distinct infrastructure, specialised containment, or specialised technology.
Oncology still leads in overall numbers, but there has been an emergence of GLP-1 agonists and other cardiometabolic and obesity drugs. These molecules, often with multi-indication relevance and long product lifecycles, have placed peptides and peptide-adjacent chemistries among the most strategically important API. These therapies require sophisticated peptide synthesis, precise upstream inputs and highly controlled large-scale manufacturing.
ADCs, radioligands and high-potency substances also continue to drive demand for OEB5/6 facilities, and these products take substantial capital and expertise to build. Orphan-disease approvals, often centred on biologic or gene-directed molecules, have also shifted the calculus. Instead of large-scale batches, companies must supply smaller, high-value quantities with impeccable quality standards.
Regulatory pressures in the APIs market
Governments are now directly intervening to secure medicine supply, demanding clearer visibility into API origins, requiring stress-tested supply chains, and supporting efforts to localise key product classes. Tariffs, export controls and geopolitical restrictions have complicated the flow of intermediates and raw materials, forcing companies to plan more holistically.
Expectations for high-complexity manufacturing are also rising, with HPAPIs, ADC payloads and viral-vector substances falling under tighter containment and segregation guidance. Biologics and biosimilars benefit from regulatory tailwinds as agencies streamline interchangeability frameworks, enabling faster access.
Technology expectations are rising alongside these trends. Regulators encourage continuous manufacturing, automation, real-time process monitoring and advanced digital systems. AI introduces new responsibilities around validation, version control and auditability as it enters process development and quality systems.
Environmental sustainability is also entering mainstream oversight. For example, EU REACH revisions and environmental rules in India now influence solvent choice, emissions control and waste-handling requirements.
Make vs buy in APIs
The “make versus buy” decision has evolved beyond a cost comparison and now involves strategic control, risk tolerance, technological capability, and regulatory readiness.
In-house manufacturing offers deep oversight of quality, intellectual property and long-term supply security. For large-volume or long-lifecycle products, internal capacity can deliver significant cost efficiencies. It also allows companies to align supply with ESG commitments and shield operations from geopolitical disruption.
However, the cost and time required to build high-potency or viral-vector facilities and to attract the specialist talent to run them place limits on how far companies can expand internally.
CDMOs provide immediate access to these capabilities, offering speed, flexibility, advanced technology, and multi-regional resilience. They reduce capital expenditure, shorten development timelines, and support filing strategies across markets. However, outsourcing inevitably requires companies to relinquish some operational control and to manage the ESG and geopolitical profiles of partners.
Where CDMOs can deliver the most value
As the pharmaceutical landscape becomes more complex, CDMOs are moving from transactional suppliers to strategic partners. Their strongest contributions lie in risk mitigation, regulatory credibility and the depth of technical support they can provide.
Multi-site, multi-region networks are now essential to supply-chain resilience, so CDMOs with this footprint reduce single-country dependency and offer geographic flexibility. Their specialist capabilities, particularly in complex areas such as ADCs, HPAPIs, and high-technology containment, give sponsors access to infrastructures that would take years and substantial investment to replicate internally.
Strong regulatory histories, transparent digital systems and robust quality cultures help sponsors navigate the rising expectations across global agencies. CDMOs also bring critical developmental support, from process optimisation to global CMC expertise, often accelerating both clinical programmes and commercial readiness.
As a global CDMO, Piramal Pharma Solutions is closely aligning with the shifting expectations of the pharmaceutical sector, with a geographic footprint spanning multiple manufacturing and development sites across continents. Piramal’s investments in advanced manufacturing capabilities further position it firmly for the future with facilities tailored for complex modalities.
Piramal Pharma Solutions’ capacity for contained manufacturing and advanced process control also ensures compliance with rigorous regulatory, safety, and environmental standards. With documented global regulatory compliance, comprehensive digital systems for process monitoring and traceability, and a history of supporting complex submissions, the company provides transparency, audit readiness and data integrity.
By helping sponsors optimise yield, scale processes reliably, and navigate the diverse requirements of multiple regulatory jurisdictions, Piramal Pharma Solutions offers a strategic partnership.
To find out more about the company’s specialist services, download the document below.
