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Outsourcing in Asia to Shrink Japan’s Revenue Share

Published: Tuesday, November 06, 2012
Last Updated: Tuesday, November 06, 2012
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Pharma’s interest in outsourcing, combined with rising industrialization in India and China, will mark a drop in Japan’s share of the continent’s revenue.

The latest report* predicts Japan’s Active Pharmaceutical Ingredients (API) Asia-Pacific revenue share to drop from a dominant 51% in 2011 to 34% by 2017, while less economically mature markets across the region expand their own.

Japan’s API market revenue grew from $9.9 billion in 2006 to $15.6 billion last year, but GBI Research expects this growth to slow substantially in the future, reaching $17.2 billion in 2017, at a modest Compound Annual Growth Rate (CAGR) of just 1.7% from 2011.

By comparison, China’s API market revenue will increase from the $6.6 billion posted last year to $17 billion by the end of 2017, representing a CAGR of 17.2% during the same time period. Similarly, the API industry in India is expected to expand in value, from $2 billion in 2011 to $5.2 billion in 2017, at a CAGR of 17.4%.

A major contributor to this disparity in growth is the growing popularity of outsourcing pharmaceutical processes to Contract Manufacturing Organizations (CMO) in developing countries where skilled workforces are readily available and labor costs can be as much as 12 times lower.

The CMO market for the Asia-Pacific region is expected to jump in value in the near future. From combined revenues of $6.6 billion last year, GBI Research forecasts the sector to reach $16.5 billion by just 2017 at a healthy CAGR of 16.4%.

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