Active pharmaceutical ingredients (APIs) form the backbone of modern medicine, driving the efficacy and safety of countless therapeutic products.

According to a recent report by MarketsandMarkets, the API market is witnessing steady growth and is projected to reach $198.39 billion by 2030 from $144.20 billion in 2025 at a CAGR of 6.6% from 2025 to 2030.¹

As global demand for pharmaceuticals continues to rise, the API manufacturing sector is undergoing rapid transformation. From cutting-edge technologies like continuous manufacturing and AI-driven process optimization to heightened regulatory scrutiny and sustainability initiatives, manufacturers are navigating a complex and evolving landscape. At the same time, supply chain disruptions and the growing reliance on outsourcing to contract development and manufacturing organizations (CDMOs) are reshaping industry dynamics. Understanding these trends is essential for industry insiders aiming to remain competitive and compliant in a market that prioritizes innovation, quality and resilience.

The following assessments explore current API outsourcing trends from a CDMO perspective, including evolving demand, supply chain dynamics, emerging technologies in API production and stricter regulatory compliance.

Global API Market Overview

“The global API manufacturing market is going through some major changes these days,” says Sean O’Brien, COO, Abzena. He elaborates, “demand remains strong, especially for cutting-edge therapies, but sponsors are increasingly prioritizing technical expertise, process know-how, and reliable supply.”

As a result, he claims the market is fragmenting in new ways. “Basic commodity APIs are consolidating, but more complex projects—like antibody–drug conjugates (ADCs) and antibody–oligonucleotide conjugates (AOCs)—are moving toward CDMOs that offer both scientific and manufacturing skills in one place. The ability to connect R&D, development, and GMP manufacturing is quickly becoming a major differentiator, and companies that do this well are emerging as the ‘go-to’ partners.”

“Outsourcing to CDMOs has increased, especially among small and mid-sized biotech firms seeking specialized expertise and flexible capacity,” remarks Frank Ferrante, Chief Strategy Officer, Cambrex. “The market has also seen a shift toward complex modalities, such as antibody-drug conjugates (ADCs), peptides, and oligonucleotides, which require advanced manufacturing technologies and capabilities. Industry investments in capacity expansion and technology adoption are aimed at addressing these evolving needs.”

According to David Molyneux, Vice President, Business Development, Sterling Pharma Solutions, the API manufacturing market is being driven by many factors. Specifically, he cites, “the continued focus on oncology therapeutics and the rise in popularity of GLP-1 drugs targeting obesity.” 

He says, “Specific areas of manufacturing are witnessing higher demand, such as highly potent APIs and antibody-drug conjugate (ADC) programs, as early-phase development projects advance into clinical phases, and ultimately commercialization.”

Kenneth Drew, Ph.D., VP Flamma USA, characterizes the API marketplace as being in a “state of flux” because of “the ongoing global chaos being currently perpetrated from the U.S.”  He claims, “Geo-political issues are making many companies reevaluate their supply chains. Some companies are unafraid while others are completely scared.”

Achim Link, Ph.D., Field Development Services Manager, Solvias, says, “The global API market looks healthy overall, but it is structurally split into two segments: a commoditized middle under constant price pressure, and a premium segment where sponsors pay for trusted geography, a strong compliance track record, and specialized capabilities.” 

He explains, “In that premium segment, ‘value’ increasingly means de-risking: strong impurity control, reliable tech transfer, and solid-state understanding that prevents late surprises during scale-up. Many programs are now designed with redundancy from the start, e.g., two qualified suppliers in different regions rather than relying on ‘lowest cost wins.’”

Outsourcing and Supply Chain Dynamics

Addressing weaknesses in global supply chains has had a significant impact on the API market in recent years.

“The COVID-19 pandemic highlighted vulnerabilities in global supply chains, prompting many pharmaceutical companies to prioritize domestic or regional manufacturing, particularly in the U.S. and Western Europe,” explains Cambrex’s Frank Ferrante. “This trend is reinforced by policy measures such as the BIOSECURE Act and tariff adjustments, which have increased demand for local API production.”

Jean-Francois Carniaus, Vice President and Global API Technical Lead, Piramal Pharma Solutions, agrees. “Government policies in the U.S., EU, India, and other countries increasingly emphasize supply-chain resilience and strategic API reserves, shaping investment flows,” he says. “Trade policies, tariff threats, and national security-driven supply-chain strategies (e.g., U.S. policy debates) introduce uncertainty into supply flows and investment decisions.”

Dr. Tom Moody, Vice President of API Development and Commercialization, Almac Sciences, says, “Global supply chains in general are under constant pressure from geopolitical issues and raw material shortages, and API supply chains are particularly vulnerable.”

According to Moody, “CDMOs are mitigating these risks through dual sourcing, second-site qualification, and robust business continuity.”

Solvias’ Achim Link concurs. He observes, “The dominant playbook is shifting toward redundancy by design: dual sourcing, regional diversification, inventory strategies for critical intermediates, and segmentation of steps by IP sensitivity and geopolitical risk.”

“Supply chain resilience is now a central element of API manufacturing strategy,” adds Abzena’s Sean O’Brien. “For complex APIs such as ADCs and AOCs, risk extends beyond raw material availability to specialized reagents, payloads, and linker components.”

He says, “API manufacturers are addressing this by strengthening supplier partnerships, building redundancies where feasible, and retaining in-house expertise for critical process steps.”

“Post-COVID supply-chain concerns have also encouraged some reshoring of API production and diversification of suppliers,” adds Piramal’s Jean-Francois Carniaus. “Investments in domestic capacities (e.g., by major pharmaceutical firms building new API facilities) are visible.”

“Onshoring and diversification are now front and center,” states Almac’s Tom Moody.

In recent months, Sanofi, AstraZeneca, Gilead Sciences, Johnson & Johnson, Takeda, GSK, Lilly and more have announced plans to invest billions across the U.S. in research and development and supply chain infrastructure.

Flamma’s Kenneth Drew admits “there is fear to work in China,” however, he remains skeptical about some reshoring trends. “The so-called ‘make it in the USA’ trend sounds good as a soundbite and may play politically with certain groups, but the reality is that the pharma marketplace is global,” he argues. “Also, the cost to do business 100% in the USA is very expensive. Finding the proper balance is the key to being successful. Blindly selecting a CDMO based solely on their location because their PE-backed marketing departments provided a pretty advertisement is risky at best and will likely lead to failure.”

“At the end of the day, people need to understand that our marketplace is global,” Drew continues. “All the talk to remove one country (see the Bio-Secure Act) sounds good but will be very difficult to actually achieve.”

“What to do? The answer is surprisingly simple,” according to Drew. “You need to find a CDMO that gives you built in options; a CDMO that may have multiple sites in various countries to allow for derisking; a CDMO that has its own strong sourcing team that ensures that they have multiple sources for key raw materials and solvents; one that is proactive and builds safety stocks of raw materials that are becoming more difficult to find on demand.”

“Seeking to mitigate increasing supply chain risks, pharmaceutical companies have identified ‘China Plus One’ as a strategic imperative,” adds Jean-Francois Carniaux. He explains, “Under this risk-management model, companies diversify their supply chains to include at least one other country in addition to China, allowing them to continue benefitting from China’s manufacturing footprint while avoiding the risks associated with relying solely on one country. This concept holds true for both drug substance and drug product.”

Sophia Meng, Vice President, Porton Pharma Solutions voices a similar opinion. “The core strategy for managing risk in supply chains lies in global production capacity layout and building multi-regional supply networks,” she says. “These initiatives enable ‘localized supply’ and global production capacity coordination, ensuring supply chain resilience.”

“Geopolitical pressures and industrial policies, especially those in the U.S., have been the catalyst for customers seeking to move to Western suppliers, putting increasing demand on manufacturing capacity within the U.S.,” adds David Molyneux of Sterling Pharma Solutions.

He says, “The impact of this reshoring on capacity and resources is greater in time- and cost-critical projects, such as clinical and commercial scale manufacturing, as opposed to early-phase development programs, where outsourcing to lower-cost economies still dominates the market.”

Emerging Technologies in API Production

In terms of which emerging technologies are having the greatest impact on API manufacturing, Flamma’s Kenneth Drew says, “The buzzword of 2025 was AI.”

“Clearly AI has had a great impact on the pharmaceutical manufacturing industry as CDMOs find ways to incorporate AI into their workspace,” Drew remarks.

Porton’s Sophia Meng says, “AI holds enormous potential in API production, particularly in predictive modeling, production process optimization, and quality control.” 

“While AI applications are currently concentrated in the drug R&D phase, its commercial use in manufacturing processes remains underutilized,” she argues. “By analyzing large volumes of production data, AI can predict equipment failures, optimize production parameters, improve product quality, and reduce costs. With technological advancements and cost reductions, AI applications in API production are expected to expand further.”

“AI & Advanced Data Analytics are having a strong, accelerating impact on HPAPI development and manufacturing,” states Piramal’s Jean-Francois Carniaux. “AI’s primary use cases include reaction optimization to improve yield, reduce impurities, predictive maintenance of equipment, process deviation detection, scale-up and tech-transfer modeling, efficiency gains and identification of the ‘golden batch,’ and faster route optimization. Collectively, these improvements have a major impact on quality while lowering energy and solvent consumption.”

However, Carniaux notes that the current reality is “AI is most effective when paired with high-quality historical process data.”

Beyond AI, other frequently cited emerging technologies impacting API manufacturing today include continuous manufacturing and biocatalysis.

According to Almac’s Tom Moody, “Technologies like biocatalysis, continuous manufacturing and digitalization are no longer ‘nice to have,’ they are becoming essential.”

“Continuous flow chemistry enables safer, faster, and more scalable production, particularly for hazardous or unstable reagents,” says Cambrex’s Frank Ferrante.

“Digital tools (AI modeling, real-time quality monitoring), continuous manufacturing, and automation are being adopted to optimize yields, reduce cycle times, and improve quality control,” adds Piramal’s Jean-Francois Carniaux.

“Continuous manufacturing replaces batch production with a continuous flow process,” Carniaux explains. “This fits well with high energy chemistry found within the manufacture of building blocks APIs. Continuous manufacturing can provide yield improvements of 10–30% and reduce cycle times from weeks to days or even hours, even though the quality & regulatory side can remain challenging.”

Cambrex’s Frank Ferrante insists that biocatalysis remains underutilized in API production. He says, “Biocatalysis can improve selectivity and sustainability in chemical synthesis.”

According to David Molyneaux, Sterling Pharma Solutions “continues to see increased demand for both flow and biocatalytic processes within development and manufacture and is working with customers to realize the full potential of these technologies at scale.”

Regulatory Compliance and Quality Standards

“Global regulatory requirements are becoming increasingly stringent, with expanded inspection scopes,” says Porton’s Sophia Meng. 

“For instance, in May 2025, the FDA announced it would expand the scope of unannounced inspections of overseas drug manufacturing facilities, covering food products exported to the U.S. and priority pharmaceuticals. The EMA evaluates similar policies in parallel, accelerating the convergence of global regulatory standards.”

Cambrex’s Frank Ferrante comes to a similar conclusion: “Regulatory guidelines are becoming more stringent, with increased focus on supply chain transparency, GMP compliance, impurity control, and environmental sustainability,” he observes.

“CDMOs are adapting by investing in advanced analytical capabilities, phase-appropriate quality systems, and regional manufacturing networks to ensure compliance and supply chain resilience. These adaptations help manufacturers meet evolving regulatory requirements and support customers in navigating complex global environments.”

“Regulatory agencies are placing increased emphasis on process understanding, control strategies, and data integrity, particularly for complex and multi-component APIs,” says Abzena’s Sean O’Brien. “For ADCs and AOCs, regulators expect clear justification of critical quality attributes (CQAs) across both the biologic and small-molecule components, as well as the conjugation process itself.”

 In response, he says, “CDMOs are embedding regulatory considerations directly into development activities.”

“Regulatory expectations increasingly translate into end-to-end control strategies: clearer impurity narratives, strong data integrity with digital traceability, and documented supply-chain provenance, with more scrutiny on outsourced steps and cross-site comparability,” adds Solvias’ Achim Link. “For complex modalities such as ADCs, regulators also expect orthogonal characterization and phase-appropriate methods for critical quality attributes (e.g., potency, DAR, linker stability). Practically, this means advanced analytics must be built and qualified as ‘manufacturing-ready,’ not treated as an R&D-only activity, so method readiness and comparability evolve in parallel with process scale-up.”

“CDMOs must always adhere to the ever-changing regulatory guidelines,” sums up Flamma’s Kenneth Drew. “Many work with their customers to ensure that they stay atop the changes. This is where having an open transparent relationship with your customer is critical. There are several large innovator companies that nurture their suppliers to help them adapt to the requests of various regulatory agencies.”

Looking Forward

“By 2030, the API contract manufacturing market is expected to be characterized by expanded capacity, advanced technology adoption, and increased focus on supply chain resilience and sustainability,” says Cambrex’s Frank Ferrante. “I see the market growth driven by oncology, complex modalities, and personalized medicine – with approvals for orphan drugs surpassing non-orphan drugs”

Sterling Pharma Solutions’ David Molyneux, predicts, “Small molecules will remain a vital part of the pharmaceutical industry, and the demand for API manufacturing in this area will continue to grow. The hiatus we have witnessed in biotech funding is beginning to relax, which will further stimulate continued growth with new small molecule projects coming through the pipeline.”

“Oral GLP-1s are likely to expand materially (with forecasts suggesting oral forms could exceed a third of the GLP-1 obesity market by 2030), further reshaping API and oral dose supply chains,” anticipates Solvias’ Achim Link. “Strong late-stage data for oral small-molecule GLP-1s (e.g., Eli Lilly’s Orforglipron) is also likely to catalyze a new wave of investment and competitive pipeline build-out.”

Flamma’s Kenneth Drew forecasts that the “new China” may be found in Africa: “A low-cost center for manufacturing is needed for starting materials for our industry. Will it come from Africa? Perhaps. South America has also been discussed. Only time will tell but there are opportunities for those locations to further globalize the industry.”

“Overall, the global API manufacturing market is undergoing a structural evolution,” concludes Abzena’s Sean O’Brien. “While demand remains robust, especially for innovative therapies, more attention is being paid to technical capability, process expertise, and supply reliability—not just sheer scale.”

“By 2030, the API contract manufacturing market will be increasingly defined by specialization and scientific depth,” O’Brien claims. “Growth will be driven by advanced modalities, including ADCs, AOCs, and next-generation biologics such as bi- and multi-specifics, where successful manufacturing depends on integrated expertise rather than scale alone.”

 “CDMOs that can combine strong R&D foundations with disciplined development and reliable GMP manufacturing will be best positioned to support these therapies,” he says. “Complexity, not volume, will shape the future of API contract manufacturing.”

References

1. https://www.marketsandmarkets.com/Market-Reports/API-Market-263.html