China Retains Edge in Global API Supply Chain Amid Shifting Trade Dynamics

New trade figures indicate that China's active pharmaceutical ingredient (API) sector demonstrated resilience in the first half of 2025, with both imports and exports registering growth. Chinese API exports reached US$27.93 billion, a year-on-year increase of 3.8%, according to the latest data.

A Transforming Global Landscape

The global API market is undergoing significant structural changes in 2025. This follows 2023 data which showed global exports of API intermediates stood at US$242.42 billion, a slight year-on-year increase of 0.4%.

Market access conditions are evolving, with barriers to the European Union (EU) market rising. The EU, the world's largest API market with imports worth US$82.07 billion in 2023, has been progressively strengthening its domestic production capacity. To date, the EU has issued 6,857 Chemical Entity Certificates (CEPs), with Chinese enterprises holding 1,139 of these, accounting for 15.23% of the total.

Meanwhile, India's Production-Linked Incentive (PLI) scheme is supporting local manufacturing of 53 specific APIs. Despite this, Chinese APIs are reported to maintain a significant cost advantage of 20%-30% over Indian products.

The United States, as the world's largest API importer, recorded imports worth US$52.9 billion in 2023. China and India remain its primary suppliers for bulk APIs. The Indian market itself exerts a dual influence; it is the world's third-largest API importer, sourcing 68.8% of its imports from China, while also acting as the second-largest global API exporter, creating direct competition with China internationally.

From January to May 2025, China's API exports to Belt and Road partner countries reached US$7.75 billion, a year-on-year rise of 4.2%, highlighting the growing potential of emerging markets in Southeast Asia, the Middle East and North Africa, and Latin America.

Divergence in Product Categories

A pronounced divergence is evident between different categories of API products. In 2024, competition intensified for bulk commodity APIs such as hormones, antibiotics, vitamins, and antipyretic analgesics, leading to continued price declines. The market for antipyretic analgesic APIs remained particularly sluggish, with paracetamol exports falling to just US$120 million, a sharp year-on-year decrease of 46.73%.

In contrast, demand for specialty APIs, including cardiovascular agents, antineoplastic drugs, central nervous system drugs, and gastrointestinal drugs, continued to expand. This steady global growth in specialty and proprietary APIs is creating greater opportunities for companies with robust research and development capabilities.

China's Enduring Role in Global Supply

Despite the global restructuring, China's position as a cornerstone of the global API supply chain appears firmly established. As one of the world's largest producers and exporters, China manufactures over 1,500 distinct active pharmaceutical ingredients.

Full-year 2022 export data underscores this role, with China exporting US$51.8 billion worth of APIs, equivalent to 11.94 million tonnes in volume. The compound annual growth rate (CAGR) for the export value from 2016 to 2022 was 12.5%. This growth reflects a structural upgrade within the industry, where the value of exports is growing faster than the volume, indicating a rise in average unit prices and enhanced product value.

Domestically, Zhejiang, Jiangsu, and Shandong provinces have emerged as key API manufacturing clusters. Zhejiang Province alone is home to four of the world's top ten API manufacturers. The city of Linhai in Zhejiang has established a dedicated chemical API base, becoming China's largest industrial cluster for chemical APIs and pharmaceutical intermediates.

Looking ahead, industry analysis suggests that prices for bulk APIs are expected to stabilise following their recent decline. Exports from both China and India are projected to resume modest growth by 2025.