Key Takeaways:
- India leads global API production, manufacturing the largest share of both essential (29%) and non-essential (38%) APIs worldwide.
- The U.S. plays a disproportionately large role in essential APIs, producing 18% of essential APIs despite a much smaller share (9%) of non-essential API output.
- China's API manufacturing share has grown to double digits, from 8% in the prior year, reflecting the country’s growing share of manufacturing capacity and signaling a greater upstream supply chain concentration risk, particularly for essential medicines.
- Essential APIs are overwhelmingly used in generic medicines (92%), meaning the APIs most critical for patient care are exposed not only to geographic concentration risks, but also to the supply chain vulnerabilities inherent in low-cost sourcing dynamics.
In a previous blog, we explored the geographic concentration of API (active pharmaceutical ingredient) manufacturing based on whether APIs are used primarily in brand or generic medicines. The analysis highlighted significant manufacturing concentrations in India and the European Union (EU), underscoring the reliance of the U.S. pharmaceutical market on international sources for drug ingredients.
Building on that analysis, this blog dives deeper into the API manufacturing landscape, this time through the lens of essentiality status as defined by essential medicines lists published by the U.S. Food and Drug Administration and the World Health Organization. These lists define essential medicines, and thus APIs, as those vital for maintaining healthcare systems and safeguarding patient health.
Figure 1: API Manufacturing Landscape by Essentiality Status, 2025 Volume in Extended Units
Key findings from the analysis include:
- India remains dominant, manufacturing 29% of essential APIs and 38% of non-essential APIs.
- The EU holds a significant share, contributing 18% of essential API manufacturing and 15% of non-essential API production.
- The United States plays an outsized role in essential API production, making 18% of essential APIs compared to 9% of non-essential APIs.
- China's overall API manufacturing share has surpassed double digits, a notable increase from the previous year's findings. This growth aligns with the rapid expansion in China’s API manufacturing capacity documented in a previous blog on API DMF filings.
- Mexico, included in the “Others” category, accounts for around 2% of API manufacturing for U.S. pharmaceutical products in both the essential and non-essential categories.
Essential and non-essential API use is overwhelmingly generic, accounting for 92% and 88% of extended units, respectively. Oral solid dosage forms represent the largest share of essential API use at 45% of extended units, followed by injectables at 17%. India is the leading source of essential APIs used in oral solid products, supplying 52% of that segment, while the U.S. accounts for 16% of essential APIs used in injectable products.
Non-essential APIs show a similar distribution. Oral solids account for an even larger share at 64% of extended units, with India supplying more than half (54%) of APIs used in that form. Across both essential and non-essential categories, China supplies around one-third of APIs used in oral liquid dosage form products.
This landscape underscores critical points about supply chain vulnerabilities and potential risks for disruptions. These findings reinforce the importance of monitoring and understanding API manufacturing trends, particularly for essential medicines. Ensuring diversified and resilient supply chains for these critical components is crucial for sustaining patient care and healthcare systems.
To construct this analysis, we considered an API as essential if it was listed on either the FDA’s Essential Medicines, Medical Countermeasures, and Critical Inputs List or the WHO’s Essential Medicines List. We excluded certain high-volume Intravenous (IV) fluids, such as sodium chloride and dextrose injections. IV fluids use simple APIs like sodium chloride (salt); their large volumes can significantly skew the analysis. Country shares of API manufacturing were calculated using IQVIA NSP extended units–the smallest saleable units (e.g., tablets or milliliters), which measure the market volume associated with Finished dose drug products utilizing these APIs. It is important to note the methodological assumption that Finished dose drug products with larger volumes are likely to consume larger amounts of APIs.
Many thanks to Stephen Colvill at the Duke-Margolis Institute for Health Policy for his contributions to this analysis.
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