Small-molecule APIs: Feedstocks
Why raw materials are nearly 40% of an API maker's costs
Why raw materials are nearly 40% of an API maker's costs What this tab covers What it is made from and what it feeds: the raw materials and energy per tonne with their share of cost (linked to the commodity table), who is low-cost and why, and the chemicals made from it.APIs are made from petrochemical aromatics and solvents, plus sugar or starch for fermentation. Feedstock cost is a small share of the value of a patented API but a large share of a generic API. What decides competitiveness is control of KSMs, solvent recovery, scale and cheap power and steam, which is why China's integrated chemical parks undercut stand-alone Indian plants.
Inputs per tonne
| Input | Quantity per tonne | Role | Share of cost | Source |
|---|---|---|---|---|
| Oil Crude oil | PMI 168-308 t materials per t API, mostly solvents (indicative) | carbon skeleton and reaction media | raw materials 39.5% of Divi's Q4 FY26 sales | Kekessie et al. 2024 (indicative); BoB Capital (May 2026) |
| KSMs and intermediates (link: ksm_intermediates) | 1-3 t per t API depending on route (indicative) | registered starting material | largest single cost for many generics (indicative) | qualitative |
| Mz Maize | not published | carbon source for microbes | not published | Aurobindo (2024) |
| Steam and electricity | steam is the larger share of process energy (Vivar et al. 2025 for paracetamol) | distillation, drying, solvent recovery | not published | Vivar et al. 2025 |
Who is low-cost, and why
Chinese producers in integrated parks with captive KSMs and cheap coal-based steam are lowest cost on commodity APIs. Indian makers compete on regulated-market quality, DMF portfolios and labour cost. European and US plants survive on complex, controlled or patented APIs.
Raw materials on the commodity table
Oil Crude oilWhat it is made into
| Product | Note |
|---|---|
| Exc Pharmaceutical excipients | combined with APIs in formulation |