White Paper
Trends in the World Small Molecule API Manufacturing M&A Market
The pharmaceutical small molecule API manufacturing industry is now experiencing a period of rapid change. This change is being driven by factors such as the changing nature of the drugs being made, expiry of patents covering the top-selling pharmaceuticals, the growth of the API manufacturing industry in India, China and Asia, shrinking margins causing downward pressure on pricing and the drive by governments to cut spending on drugs. This paper takes a look at how these trends are helping shape mergers and acquisitions (M&A) activity within this dynamic sector.
Last year (2008), global pharmaceutical fine chemicals production was valued at around $70 B, a figure predicted to rise to $106 B by 2015, giving a CAGR of 6.3% over this period. During this time frame, the Asia Pacific region is set to overtake Western Europe as the world’s top producer, predicted to grow at 9% annually 2008-2015. The strongest growth is expected to come from India and China, largely driven by elevated pricing pressure in the West and the growth of the generics market. However, it should be noted that the Western European segment itself will be growing at a healthy 5.5% CAGR.
There are currently a number of trends that are affecting M&A activity in the pharmaceutical fine chemicals sector:
- Overcapacity in the West from historical success
- Overcapacity from changes in new therapies approved and under development
- Growth of the generics segment
- Growth of the Asian CMO sector
- Increased manufacturing out-sourcing by big pharma
- Highly fragmented CMO market now ripe for consolidation.
These points are considered in turn in this paper. To continue reading this paper, please download the pdf from the section on the right.
