OSD
What’s affecting growth in the small molecule API market in 2022?
The demand for small molecule drugs remains high, with figures showing that 97% of marketed drugs are classified as small molecules.
Within this pipeline, highly potent small molecule active pharmaceutical ingredients (HPAPIs) are growing particularly quickly, with over 1,000 in development in 2021 and market estimates predicting 10% annual growth.
This level of growth shows no sign of slowing down in 2022 and beyond, thanks to a number of key trends impacting the sector. Here, we break down some of the most significant drivers of growth and change in the small molecule segment.
1. Increased appetite for specialist capabilities
HPAPIs offer great therapeutic benefits to patients at low doses, but they require specialised containment procedures to minimise risk to operators and protect their integrity.
The significant therapeutic benefits of HPAPIs means that their rise is set to continue. However, specialist manufacturing capabilities are required for their development and manufacture.
These capabilities are expensive and require specialisms that small and virtual pharma companies are often unable to access in-house. In fact, in 2021 only one third of small molecule API facilities offered these containment capabilities.
Instead, they must outsource to CMOs with the facilities and capacity to meet the heightened demand. This demand and rarity in the market has led to more CMOs investing in their own specialist manufacturing capabilities, often acquiring companies that have the existing infrastructure.
In fact, of all facilities acquired by CMOs between 2018-2020, 58% were commercial-scale small molecule API manufacturing sites.
We can expect to see more investment from CMOs into these specialist capabilities to meet the growing demand, and fulfil the needs of small and virtual pharma companies in 2022 and beyond.
2. Geographic diversification of the API supply chain
China and India continue to dominate the small molecule space, holding 34% of the market revenue share. But pharma companies who heavily rely on a single region for their API supplies place themself at risk of supply disruption.
The COVID-19 pandemic highlighted vulnerabilities in the global supply chain, leading to a greater need for diversification to reduce reliance on any single geographic region.
This has meant that many companies have expanded their local presence across different markets, investing further into building facilities across Europe and the US. This allows them to offer their partners a consistent supply of APIs, by mitigating against the impact of disruption elsewhere in the world.
As pharma companies across the US and Europe increasingly seek to diversify their supply chain, it will become more critical for pharma companies to localise their supply by choosing partners closer to their base of operations.
3. New discoveries mean small molecules will continue to be highly prized
Between 2018-2020, the most common acquirers of CMOs came from private equity and investment firms. We can expect investors to continue to prize small molecule API manufacturing for the foreseeable future, with the market expected to reach $51.2 billion USD by 2026 (CAGR 8.05%).
This growth can be attributed to an increase in the number of approved small molecule HPAPIs, which represent around 75% of all drugs accepted by FDA in 2021.
The rise of oncology drugs is a significant growth driver too, with cancer treatments accounting for the majority of these new approvals.
All of this means that demand for small molecule development and production is likely to remain high for some time.
How to harness this growth?
Pharma companies looking to benefit from this growth in the small molecule market must explore ways to overcome their most pressing challenges.
Working with the right CDMO partners can help address challenges so that pharma companies can continue to benefit from small molecule APIs in 2022.
At Recipharm, our established API development and manufacturing services in Europe continue to successfully meet this heightened demand for all of our customers.
Diving deeper into the future of small molecule development, the 2021 Global Data study by Pharm Source features our contributions and wider industry findings that highlight the biggest growth drivers for 2022 and beyond.