What Are Pharmaceutical Intermediates? A Buyer’s Guide to Sourcing from India (2026)

Pharmaceutical intermediates are chemicals produced during the production of APIs (active pharmaceutical ingredients).

Further processing or purification is required to convert intermediates into APIs. In their current state, intermediates are not complete pharmaceuticals.

Many intermediates are dangerous or toxic and may have no therapeutic value.

Understanding the differences between intermediates, APIs, and other pharmaceutical products helps to determine what kind of documentation should be provided, what kind of inspection should be expected from regulatory authorities, and what the cost of the product should be.

Misclassifying a product can result in overpayment for the product, or it can result in inadequate assurance for the registration of the product.

Pharmaceutical intermediates from India dominate the global market for intermediates.

This report outlines the current market situation of pharmaceutical intermediates and the associated risks.

What a Pharmaceutical Intermediate Actually Is

The definition

Intermediates are defined in the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) Q7 guidelines^[1] as materials produced in the course of manufacturing an active pharmaceutical ingredient (API) that are pending further chemical changes or require further purification to be an API.

Intermediates may be sold in a separate form or may be further processed as an input in the subsequent step of the synthesis.

APIs are typically synthesised by several chemical reactions. The materials produced in the course of the reaction from the starting material to the intended final API are called intermediates.

Pharmaceutical intermediates are required as a part of the synthesis of an API.

The synthesis of an API may be a lengthy and complicated process, and acquiring intermediates may help in avoiding complicated syntheses.

Why intermediates are bought and sold at all

There are three main reasons for the presence of the drug intermediates trade.

First, manufacturing intermediates at a large scale at suitable locations brings down the cost of the end drug and thereby makes the drug more affordable.

Second, many companies outsource the more risky and complex chemical syntheses to specialised service providers.

Lastly, it has been observed that it is more reliable to source the building blocks for a critical step of a drug synthesis route from a different location rather than locating the entire route at a single place.

The pharmaceutical intermediates market is a large and important market in itself.

It is worth about US$ 47.3 billion in 2025 and should reach US$ 82.7 billion by 2032,^[2] with a CAGR of 8.3% in the process.

Contract manufacturers should account for more than 33% of the market in the process. 

The Three Terms Buyers Confuse and the GMP Line

There is a lot of imprecision when these three terms are used in trade conversations.

However, each has a specific meaning when dealing with regulators, and those meanings differentiate the type of documentation required and how the regulator will deal with the material.

Term	Definition	Taxonomy
API (or KSM) raw material	A structural fragment of an API which may be an intermediate	The point at which GMP is applied
Intermediate	A component formed during a chemical or physical change to a starting material and remains to be purified to become the API	Between starting material and API
Active Pharmaceutical Ingredient (API)	The component of a pharmaceutical product that, when added to a drug product, yields a therapeutic effect to the end-user	Drug substance process end

The GMP line: the concept everything hinges on

As defined in ICH Q7, the point at which GMP applies to active pharmaceutical ingredients (APIs) is the point at which the starting material is added to the process.

According to ICH Q7, intermediates produced before this point are outside the scope of this document.

Areas of interest before this point are usually not covered by Pharmaceutical GMP. Areas of interest beyond this point are covered by GMP.

From an economic point of view, a GMP line separates high-grade (pharmaceutical) intermediates from fine chemicals.

From a technical point of view, a high-grade intermediate produced on the GMP line is covered by all documents (i.e., CTD) related to the GMP intermediate.

The document (CTD) provides the purported quality of an intermediate. A fine chemical produced before the GMP line does not come with any quality documents (CTD).

Therefore, depending on the regulatory status of the end product and the associated claims, it may be necessary to use a high-grade (pharmaceutical) intermediate or a fine chemical.

Where Intermediate Sourcing Goes Wrong

Buying the wrong grade

The error that occurs the most, and happens right after the GMP line, is that a buyer of a product that requires a GMP intermediate accepts a cheaper non-GMP alternative, or pays a premium for a GMP material that doesn’t actually need to be GMP.

A grade is not a label that you put on your product for marketing purposes. It’s the regulatory status of your product that needs to reflect your filing.

Trusting a certificate that doesn’t tell the whole story

A certificate of analysis reflects the processes and procedures upon which the confirmation relies.

The integrity of data is one of the most significant quality challenges of the pharmaceutical and biopharmaceutical industry, and has been repeatedly cited in FDA warning letters.

The analysis of laboratory records has shown that in several cases, the records did not reflect the tests that were actually performed.

Several deficiencies may pose a greater risk to a patient and may be more important than a stated value for purity.

Some of these deficiencies include failure to test for residual solvents, specification of limits for impurities as “pass” or “fail,” lack of Chiral and/or enantiomeric-excess analysis for compounds containing stereocenters, and lack of specific information when results are expressed as “analysed by HPLC.”

It may be that some compounds that are analysed contain specified impurities.

Concentrating supply in one source

Concentration risk is a recent phenomenon. In early 2020, many Chinese factories closed due to COVID-19, causing Indian paracetamol prices to increase by around 40%^[3] and azithromycin prices to increase by around 70% within a few months.

These events show the danger of relying too heavily on a single country to source medicine.

Why India- Honestly

The genuine case

India is one of the leading countries in API intermediates and APIs. Approximately 8% of the global APIs are manufactured in India. India caters to almost 20% of the demand for global generic medicines.

About 60% of the world’s pharmaceutical formulations are manufactured in India. India has the largest number of manufacturing plants approved by the US FDA.

More than 2000 pharmaceutical plants in India have Good Manufacturing Practice (GMP) certification by the World Health Organisation (WHO).

India provides APIs at competitive prices and has an established Contract Manufacturing Organisation (CMO) and Contract Development and Manufacturing Organisation (CDMO) industry with several regulatory and technical personnel who can communicate in English.

Recently, several pharmaceutical companies have started manufacturing in India to mitigate country-specific risks.

Add the practical buyer advantages: strong cost competitiveness, fluent English-language technical and regulatory communication, a mature CDMO and custom-synthesis ecosystem with deep DMF and CEP filing experience, and for companies actively diversifying away from a single country of origin, the clearest at-scale alternative currently available for pharmaceutical sourcing from India.

The honest caveat

India continues to be vulnerable to China for pharmaceutical raw materials. The Indian government data shows that the country imported drugs worth around ₹24,000 crores in 2019-20,^[4] of which around 70% were imported from China. In 2022-23. 

India’s total imports of bulk drugs and intermediates reached around ₹36,229 crores and imports from China^[5] were around ₹25,551 crores, which accounts for 68% of the total.

Although procurement of an intermediate in India will result in not sourcing from China, it still does not eliminate upstream risk. For an interested customer, the correct question is not “is this China-free?” but “where in this (supply) process is risk with China, and is it acceptable to have risk with China for this (product)?”

The best suppliers in India will be able to answer this question.

India’s Manufacturing Clusters

Because India’s industries are regionally divided, it is easier to find specific industries during due diligence.

Cluster	Strengths	Note
Gujarat (Ahmedabad-Vadodara-Ankleshwar-Vapi)	Produces about a third of India’s pharmaceutical products; deep connections to India’s chemical industry; produces APIs and fine chemicals.	Mundra and Kandla Ports speed up import and export.
Hyderabad (Telangana)	Leading center for India’s bulk pharmaceutical industry and APIs.	Hosts numerous large API and CDMOs.
Mumbai, Pune, and Tarapur (Maharashtra)	Strong in pharmaceutical formulations and R&D; strong business and pharmaceutical industry services; processes R&D and drug intermediates.	–
Andhra Pradesh and Himachal Pradesh	Strong in intermediates, APIs, and pharmaceutical manufacturing.	Bulk drug parks in Andhra Pradesh, especially with the PLI scheme, offer ready-to-use infrastructure.

Additional cluster infrastructure is being developed. Three bulk drug parks (BDPs) in Andhra Pradesh, Gujarat, and Himachal Pradesh, at a total cost of over ₹63 billion, with about ₹30 billion^[6] of central financial support, offer shared services like utilities, effluent treatment, and test facilities to reduce the cost of drug manufacture for individual units.

The Documents to Demand from an Intermediate Supplier

Pharmaceutical intermediates are purchased based on a number of qualities. For one, an intermediate supplier should provide documentation to validate a product’s identity.

This information should be supplied before the placing of any purchase order. Expect certification of analysis and safety data sheets to be supplied with each shipment.

Intermediate Document / Information	Importance to an Intermediate	Watch Out For
Batch-specific Certificates of Analysis (CoA)	Used to validate the identity, assay, and impurities of the batch of material produced.	Verify that the batch number on the certificate matches the batch number on the batch record. Check for missing impurity and residual solvent limits.
Residual Solvents and Impurity Data	Impurities can affect the activity and purity of the downstream API.	A “Pass test” indicates that the analysis was performed, but no values or limits were specified. No test for the presence of metals was performed.
Chiral and Enantiomeric Impurity Data (if applicable)	The presence of other stereoisomers can impact the desired activity and purity of the final compound.	No chiral data was provided for compounds containing a stereogenic center.
Reference Method and Specification	Defines and provides acceptance criteria for each test and method.	Method and acceptance limits are vague.
Grade Statement / Good Manufacturing Practice (GMP) Certificate	Helps establish the grade and GMP status of the intermediate.	Check whether the certificate is expired or whether its scope does not include the material being evaluated.
Stability Data and Retesting	Supports the established shelf life/retest period and continued suitability of the intermediate.	Retest data is not provided.
SDS and Certificate of Origin	SDS provides safety and handling information, while the Certificate of Origin supports origin-related regulatory and trade requirements.	SDS is out of date or does not meet GHS requirements.
CEP or DMF (if applicable)	Justifies and supports your regulatory filing.	A letter of authorization was offered, but it is not current.

How to Source Intermediates from India, Step by Step

Step 1: Define the material and the grade you actually need

Decide on the raw material and the required grade. Specify the volume required. Also, determine if your product registration allows the use of an intermediate that meets Good Manufacturing Practice (GMP) or if a non-GMP fine chemical can be used.

Step 2: Shortlist real manufacturers, not just traders

Identify potential suppliers. Suppliers of fine chemicals are usually trading companies; however, some are manufacturers. Some manufacturing company names are listed in this report.

Contact each company to confirm if the raw material is manufactured by them. Also, find out if their intermediates are manufactured by them or their Known Starting Materials (KSMs).

Step 3: Request and verify the documentation set

Verify the manufacturer’s documentation. A standard documentation package is described in this report. Verify the manufacturer’s GMP certifications and import approvals (i.e., US/EU) by reviewing the documents rather than relying on electronic copies.

Step 4: Test a sample and qualify the supplier

Test a representative sample. If the raw material is GMP, a sample should be tested to determine if it meets your specification.

Step 5: Agree commercial terms and lock quality in writing

Finalize commercial and legal aspects. If the raw material is to be imported in large quantities, finalise the legal aspects (e.g. terms, notifications, and inspections) and the commercial aspects (e.g. price, lead time, and quantities).

If raw material is to be imported from China, determine your risk tolerance for the material. Is the risk acceptable for the product?

What a Strong Indian Intermediate Partner Looks Like

Choose a supplier that clearly labels all intermediates and provides full documentation from Section 6. Providing complete documentation includes impurity and chiral profiles.

The supplier should publicly disclose the suppliers of their starting materials. Acting in good faith, the supplier should have verifiable WHO-GMP and, if relevant, the authorisation to produce for the regulated markets.

Additionally, the supplier should be able to perform custom synthesis and be willing to sign a quality agreement.

Actiza Pharma is a pharmaceutical intermediates manufacturer in Gujarat, India. With a large product and market presence.

You can request a copy of Actiza’s WHO-GMP, facility approvals, and DMF/CEP, if available. You should verify these authorisations against the source, if available.

The same practice is recommended for all suppliers.

According to the practices recommended in this guide, if you need to evaluate an intermediate’s specification against a targeted specification, you should request samples or specifications from shortlisted manufacturers.

FAQ

Conclusion

A pharmaceutical intermediate is part of an active pharmaceutical ingredient (API) but is not the final API. Intermediates are similar to starting materials, but they are different in that they can affect the quality of a drug.

Intermediates must be sourced similarly to starting materials, but the quality of the final drug relies on the intermediate and the starting material.

Three factors must be evaluated when determining the suitability of a pharmaceutical intermediate: where it falls in relation to good manufacturing practice (GMP), what its true chemical composition is, and what the track record of the manufacturer is.

The best supplier of an active pharmaceutical ingredient (API) is in India. Indian suppliers have the best cost and quality.

Diversifying suppliers is important, especially after China. Indian suppliers also have a rigorous quality assurance system.

In order for the pharmaceutical industry to grow, systems must be put in place to ensure that new drug substances are ready as quickly as possible.