The Active Ingredients market size is estimated to grow at a CAGR of 6.3% during the forecast period 2022-2027. Active ingredients are the components of a product that are subjected to natural processes during the manufacturing process and which include salicylic acid, arecoline, petrolatum and mineral oil. An active ingredient is a chemically active pharmaceutical ingredient and the traditional word for the active pharmaceutical ingredient is pharmacon. It is widely used in pharmaceuticals, agriculture and cosmetics, where a combination of active chemicals and other compounds is developed to enhance the effects of pharmacological and pesticide activities. The rising need for multifunctional components is a primary driver of the active ingredients market's expansion. Furthermore, rising demand for sun protection, skin whitening, or anti-aging treatments, as well as a developing trend in the cosmetic sector and the increasing prevalence of male grooming, is projected to boost the growth of the active ingredients market. The covid-19 pandemic majorly impacted the market due to restricted production, supply chain disruption, logistics restrictions and a fall in demand. However, with robust growth and flourishing applications across major industries such as skin care, hair care and others, the active ingredients industry is anticipated to grow rapidly during the forecast period.
Active Ingredients Market Report Coverage
The “Active Ingredients Market Report – Forecast (2022-2027)” by IndustryARC, covers an in-depth analysis of the following segments in the Active Ingredients industry.
Key Takeaways
- The Asia-Pacific region dominates the Active Ingredients market size, owing to the Increased government emphasis on generic drugs, as well as rising demand for cosmetics and skin care products in this region.
- Rising product demand connected to youth-centric strategy has expanded the use of active ingredients, creating numerous prospects for the active ingredients industry.
- Rising demand for sun protection, skin whitening and anti-aging treatments, as well as the expanding trend of men grooming, are likely to drive the expansion of the active ingredients market.
Figure: Asia-Pacific Active Ingredients Market Revenue, 2021-2027 (US$ Billion)
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Active Ingredients Market Segment Analysis – by Source
Natural held a significant share in the Active Ingredients market in 2021 and is forecasted to grow at a CAGR of 6.5% during the forecast period 2022-2027, owing to increasing demand for natural ingredients over synthetic ingredients. The increasing awareness about the benefits of natural ingredient-based products has prompted customers to seek out eco-friendly products such as arecoline, petrolatum and mineral oil products. Growing environmental concerns and consumer awareness of the advantages of natural products are both anticipated to drive up demand for active ingredients. While there is a growing awareness about environmental safety, numerous personal care product makers have shifted their focus to eco-friendly products, which drives the demand for natural active ingredients. For instance, L'Oréal and the multinational packaging company Albea produced paper-based cosmetic tubes in March 2020. Bio-based paper is used in the developed cosmetic tubes. Thus, owing to numerous advantages and abundance over synthetic ingredients, the demand for natural ingredients is growing for application in major industries, thereby boosting the active ingredients market share in the coming years.
Active Ingredients Market Segment Analysis – by End-Use Industry
Personal Care & Cosmetic held a significant share in the Active Ingredients market in 2021 and is forecasted to grow at a CAGR of 6.8% during the forecast period 2022-2027, owing to expanding global population and increased consumer desire for attractiveness. The increased usage of cosmetic active ingredients is also being influenced by growing worries about aging skin and the desire for a uniform skin tone. The market is dominated by personal care & cosmetic primarily because of the rising demand for anti-aging, skin-lightening and sunscreen products as a result of consumers' increased knowledge of the importance of their health and skin. Moreover, the increased need for men's grooming products is increasing the demand for skin and hair care products, resulting in an increase in the demand for active ingredients in personal care & cosmetics. According to the International Trade Administration, Mexico's overall cosmetic sector output increased from $7.10 billion in 2018 to $7.15 billion in 2019. For instance, according to Cosmetic Europe, the personal care and cosmetics industry has witnessed a growth of 1.3% in 2018 as compared to 2017. The demand for active ingredients is rising dramatically along with the personal care and cosmetics sectors. Therefore, the growing personal care and cosmetics market is a key factor in the growth of the active ingredients market share over the forecast period.
Active Ingredients Market Segment Analysis – by Geography
The Asia-Pacific held a significant share in the Active Ingredients market in 2021 up to 43% and is forecasted to grow at a CAGR of 6.9% during the forecast period 2022-2027. The fuelling demand and growth of active ingredients in this region are influenced by flourishing demand from major industries such as personal care & cosmetic, agriculture and others, along with fuelling manufacturing activities across APAC. The personal care & cosmetic sector is growing rapidly in Asia-Pacific owing to rapid technical development, product innovation and expanding consumer preference. According to the India Brand Equity Foundation (IBEF), the beauty, cosmetics and grooming market in India in 2025 will have grown from US$6.5 billion to US$20 billion. According to the International Trade Administration, Mexico's overall cosmetic sector output increased from $7.10 billion in 2018 to $7.15 billion in 2019. According to the International Trade Administration, Thailand's beauty and personal care goods market was valued at around US$6.2 billion in 2018 and is projected to grow to US$8.0 billion by 2022. Thailand's beauty and personal care sector is projected to grow at a rate of 7.3 percent per year from 2019 to 2022. With the rise in personal care & cosmetic production and flourishing consumer demand in APAC, the demand for active ingredients for a wide range of applications such as skin care, hair care, face care and others will grow. This is anticipated to boost the active ingredients market size in the Asia-Pacific region during the forecast period.
Active Ingredients Market Drivers
Increasing Governments Initiatives in Agriculture:
Governments are spending extensively on agricultural programs and investments since it is an effective strategy to increase agricultural productivity while also improving environmental sustainability, which is boosting the market growth of Active Ingredients in the agriculture industry. According to China's Ministry of Agriculture, over 1,300 Chinese firms made $26 billion in overseas investments in agriculture in 2016. The overall amount of private investment in India should rise (with an additional investment of Rs. 78,424 crores) from Rs. 61,000crore in 2015-16 to Rs. 139,424crore by 2022-23. In India, the Pradhan Mantri Samman Nidhi Yojana was established in the Budget 2019-20, which provides a minimum fixed pension of Rs 3000 (US$ 42.92) to qualified small and marginal farmers upon reaching the age of 60. The Canadian and Saskatchewan governments have announced more than $484,000 in funding for six projects under the Strategic Field Program (SFP), which provides funding for field-level demonstrations and evaluation of selected agricultural practices and technology. According to the Department of Food and Rural Affairs, the UK government has launched sustainable farming initiatives and the Farming Innovation Pathways was also introduced as a research and development competition inside UK Research and Innovation's Transforming Food Production program to develop farm-focused innovations and funding for the program was increased to £14.5 million. As a result of different government initiatives, agricultural productivity is expanding in many regions. And, as agricultural output increases, so does the demand for active ingredients, which drives the active ingredients market share in agrochemicals.
Flourishing Demand for Multifunctional Ingredients:
The increasing need for improved versatility and varied advantages from a single product is a primary element driving the demand for multifunctional compounds in Active ingredients. Active and specialized compounds are also present in these multifunctional products. Active multifunctional chemicals in a personal care product can serve multiple functions non-comedogenic blemish balm (BB) cream is touted as a multifunctional treatment that can address a variety of skin problems caused by excessive sun exposure, such as aging, dullness and tanning, which driving the market growth of active ingredients. For instance, in May 2022, Avant, a cell culture biotech start-up, introduced a multifunctional protein made from cultivated fish cells for active cosmetics. The company claims that this component will create a completely new market for anti-aging and protective skin care. In April 2021, Symrise introduces HydrolexTM E, a multifunctional solution for the protection of modern cosmetic compositions. As a result, the increased need for multifunctional ingredients will drive the active ingredient market over the forecast period.
Active Ingredients Market Challenges
High Manufacturing Cost:
The high manufacturing cost for Active Ingredients is one of the major challenges faced by the Active Ingredients market. The high cost of products and ingredients due to their restricted availability, such as salicylic acid, arecoline, petrolatum and mineral oil are another barrier to the market expansion of active ingredients, particularly in light of the expanding trend toward organic and natural products. The high cost of feedstock discourages ingredient producers from putting money into organic cosmetic formulations. To comply with regulatory bodies' criteria for active ingredients, businesses must adhere to qualification standards, procedures and safety checks, which drives up the cost of producing active ingredients. Furthermore, the market expansion of active ingredients is also impacted by stringent government laws and industry standards connected to the usage of ingredients in various industries. This results in a considerable increase in active ingredient prices, which drives up manufacturing costs and reduces manufacturers' profit margins, thereby limiting the active ingredients market growth.
Active Ingredients Industry Outlook
Technology launches, acquisitions and R&D activities are key strategies adopted by players in the Active Ingredients market. The top 10 companies in the Active Ingredients market are:
- BASF SE
- The Dow Chemicals Company
- Ashland Inc.
- Rhodia
- Du Pont
- Sumitomo Group
- LOral S.A.
- Beiersdorf AG
- Sederma Inc.
- Evonik Industries.
Recent Developments
- In April 2021, Ashland has introduced a new active skin care component that claims to add vibrancy and "glow" for a well-aged appearance.
- In October 2020, Evonik has significantly expanded its bio-based portfolio of active ingredients for the beauty and personal care industry to address growing demand for unique, sustainably sourced products.
- In January 2020, At Cosmet'Agora 2020 in Paris, BASF SE introduced new skincare active ingredients Hydagen® Aquaporin, Hydrasensyl® Glucanand InolixirTM for makeup applications.
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