Compounding Pharmacies Market Size, Share & Trends Analysis Report By Dosage Forms (Solid Oral Preparations, Liquid Preparations, Topical, Ophthalmic, Nasal, Others), By Therapeutic Area (Hormone Replacement Therapy, Pain Management, Dermatology applications, Specialty drugs, Nutritional supplements, Others), By Compounding Type (Pharmaceutical ingredient alteration (PIA), Pharmaceutical application alteration (PAA), Currently unavailable pharmaceutical manufacturing (CUPM), Pharmaceutical dosage alteration (PDA), Specialized animal pharmaceutical manufacturing (SAPM)), By End-User (Adult, Pediatric, Geriatric, Veterinary) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Compounding Pharmacies Market Size

The global compounding pharmacies market size was valued at USD 12.25 billion in 2023 and is projected to reach from USD 12.94 billion in 2024 to USD 20.17 billion by 2032, growing at a CAGR of 5.7% during the forecast period (2024–2032). 

In recent years, there has been a surge in the demand for personalized medicine owing to its high safety and efficacy. This growth in the demand for personalized medicine is estimated to drive the global compounding pharmacies market. Moreover, there has also been a growth in drug failure rate as most of the drugs that enter the clinical trials are not approved by regulatory bodies, creating opportunities for market expansion as compounding pharmacies can use these rejected drugs that are viable in their formulation.

Compounding pharmacies are pharmacies that specialize in the preparation of personalized pharmaceuticals tailored to the specific requirements of particular patients. These pharmacies specialize in compounding, which entails combining, mixing, or modifying pharmaceutical materials to produce customized pharmaceuticals to meet unique needs that commercially accessible drugs cannot fulfill. 

Compounding pharmacies can manufacture pharmaceuticals that are not readily accessible in the market, such as drugs that have been discontinued, orphan drugs, or drugs that are in limited availability. Compounding is advantageous for pediatric and veterinary patients who may encounter challenges with conventional pharmaceutical formats or necessitate precise dosages that are not easily accessible.

Top 3 Key Highlights

• Solid oral preparations dominate the dosage form segment
• Pharmaceutical ingredient alteration (PIA) dominates the compounding type segment
• North America is the highest shareholder in the global market

Compounding Pharmacies Market Growth Factors

Increasing Demand for Personalized Medicine

Personalized medicine is a growing approach that customizes medical treatment based on the unique characteristics of each patient. It can enhance treatment effectiveness, safety, and compliance while mitigating the likelihood of negative effects and drug interactions. Compounding pharmacies can offer individualized medication by tailoring a prescription's dosage, formulation, taste, or components based on the patient's genetic makeup, medical background, allergies, preferences, or other relevant criteria. 

Compounding pharmacies can produce bioidentical hormone replacement therapy (BHRT) specifically designed for women experiencing menopausal symptoms. They may also formulate transdermal pain creams for patients who are unable to handle oral opioids. In 2016, the Personalized Medicine Coalition (PMC) estimated that 20% of the new molecular entities approved by the FDA were customized drugs. Hence, the growing favorability of personalized medicine is expected to drive the global market growth. 

Shortage of Drugs

The global issue of drug shortages impacts the availability and accessibility of essential drugs for a range of illnesses and conditions. Drug shortage can arise due to multiple circumstances, including production complications, quality deficiencies, disruptions in the supply chain, regulatory interventions, market dynamics, or natural calamities. The demand for compounded medication is expected to increase due to the need for immediate availability of conventional pharmaceuticals. The Drug Shortages Task Force's latest report has identified 163 pharmaceuticals that experienced shortages between 2013 and 2017.

Furthermore, it mentioned factors such as insufficient motivation to develop drugs with lower profitability and challenges related to logistics and regulations. The anticipated impact of this pattern in the traditional drug industry is projected to stimulate the market. Moreover, compounding pharmacies may mitigate the effects of drug scarcity by manufacturing medications that are not readily accessible in the market, such as discontinued or orphan pharmaceuticals, as well as drugs in great demand or with limited availability. Compounding pharmacies can manufacture hydroxychloroquine, a medication utilized to treat COVID-19, and experienced a significant scarcity during the pandemic. Such factors drive market growth.

Market Restraining Factors

Lack of Skilled Lab Technicians and Pharmacists

The field of compounding pharmacy is complex and specialized, demanding an enormous amount of expertise, understanding, and experience from the laboratory technicians and pharmacists responsible for preparing the compounded drugs. To guarantee compounded pharmaceuticals' quality, safety, and effectiveness, they must adhere to rigorous standards and procedures while meeting all regulatory requirements and recommendations. However, there needs to be more skilled laboratory technicians and pharmacists in the compounding pharmacy industry, particularly in developed nations with a substantial demand for compounded medications. This can impede market expansion and present a formidable obstacle for compounding pharmacies in meeting client expectations and demands.

Market Opportunities

Growing Drug Failure Rate

The drug research and development process is expensive and highly risky, requiring considerable time. A new drug must undergo several clinical studies before receiving a license to be sold and used in treatment. However, numerous pharmaceutical companies do not successfully navigate clinical trials due to various factors, including insufficient effectiveness, safety concerns, or limited market potential. According to PhRMA, the average time and cost required to produce a single new treatment, considering the expenses incurred from numerous unsuccessful attempts, is 10-15 years and USD 2.6 billion, respectively. Only 12% of newly developed molecular entities that undergo clinical trials ultimately obtain approval from the U.S. Food and Drug Administration (FDA).

Consequently, numerous medications exist that have the potential to be both efficacious and harmless. However, they still need to be made available in the market due to the need for more success in clinical studies. Compounding pharmacies offer an opportunity to obtain these drugs by manufacturing them in limited quantities and under the guidance of a clinician. This can be advantageous for people who lack alternative therapy options or who are seeking alternative therapeutic approaches.

Regional Insights

North America Dominates the Global Market

North America is the most significant global compounding pharmacies market shareholder and is expected to expand substantially during the forecast period. This is primarily due to the region's strong demand for personalized medicine, significant geriatric population, high prevalence of chronic and rare diseases, drug shortages, favorable reimbursement policies, and well-established compounding pharmacy industry. According to the CDC, around six in ten adults in the United States presently have a chronic illness, such as heart disease, cancer, or diabetes. Chronic illnesses are a major contributor to mortality rates in the United States, with heart disease and cancer alone responsible for over 38 percent of all fatalities. Moreover, the pharmaceutical industry experiences the highest frequency of medication product recalls. In 2018, 84 companies in the United States reported at least one drug product recall. Consequently, there currently needs to be more drugs in the region. 

Additionally, the United States is projected to have the greatest market share in the market in North America, mostly due to favorable government regulations. The FDA has classified compounding pharmacies as either 503A or 503B. A 503A compounding pharmacy is a type of pharmacy that the FDA recognizes as a traditional compounding pharmacy. These pharmacies compound medications based on individual patient prescriptions and are obligated by state pharmacy boards to adhere to USP requirements. However, the FDA classifies 503B compounding pharmacies as outsourcing operations that can manufacture and distribute large quantities of medications with or without prescriptions to healthcare facilities. All these factors are anticipated to contribute to expanding the regional market.

Asia-Pacific: Fastest growing region with the highest CAGR

The Asia-Pacific region is projected to have the most rapid growth in the market. This is primarily due to the fast-paced advancement of the healthcare sector, the increasing population and urbanization, the rising disposable income and healthcare spending, and the growing number of elderly individuals in the region. According to ESCAP, in 2020, 13.6% of the population in Asia-Pacific was 60 years or older. By 2050, this proportion will increase to one-quarter of the population. Moreover, the population of older individuals in Asia-Pacific is expected to increase by over two-fold, from 630 million in 2020 to around 1.3 billion by 2050. China, India, and Japan primarily dominate the Asia-Pacific market because of their substantial patient population, significant market growth potential, and the increasing presence of compounding pharmacies in the region.

Compounding Pharmacies Market Segmentation Analysis

By Dosage Forms

The market is segmented into solid oral preparations, liquid preparations, topical, ophthalmic, nasal, and others. The solid oral preparations segment is the most significant contributor to the market. The demand for oral compounded medication is significant due to its ease of administration and convenient compounding, which allows for precise dosage schedules. The oral compounding drug segment accounted for most of the revenue and is projected to experience growth due to its related advantages, such as convenient consumption, high patient adherence, safety, and minimum discomfort. In addition, oral compounding drugs have impressive longevity that enhances patient receptiveness. Oral compounded drugs have demonstrated their superior effectiveness in numerous pharmacokinetic investigations.

By Therapeutic Area

The market is bifurcated into nutritional supplements, hormone replacement, dermatology applications, pain management, specialty drugs, and others. Compounding pharmacies can produce personalized nutritional supplement formulas tailored to an individual's precise health requirements, allergies, or dietary limitations. This enables the personalization of substances and quantities to cater to the individual patient more effectively. Certain individuals may exhibit allergies to substances frequently present in commercial dietary supplements. 

Compounding pharmacies can eliminate these allergens and produce customized supplements that meet the patient's needs. Moreover, certain patients may necessitate a blend of particular nutrients that are not easily obtainable in off-the-shelf supplements. Compounding pharmacies can combine these nutrients into a single formulation, which makes the patient's supplement regimen more straightforward.

By Compounding Type

The market is bifurcated into pharmaceutical ingredient alteration (PIA), pharmaceutical application alteration (PAA), currently unavailable pharmaceutical manufacturing (CUPM), specialized animal pharmaceutical manufacturing (SAPM), and pharmaceutical dosage alteration (PDA). 

The pharmaceutical ingredient alteration (PIA) segment dominates the global market. The PIA segment is projected to have a substantial market share due to its ability to modify a drug's active or inactive components to meet the patient's specific requirements, such as eliminating allergens, incorporating flavors, or adjusting potency. The ability to modify pharmaceutical ingredients is a huge plus for compounding pharmacies. It permits adding or removing particular drugs from a medication to create patient-specific medicine according to the patient's need.

By End-Users

The market is bifurcated into adult, pediatric, geriatric, and veterinary. The adult population has recently preferred compounded medications due to the rising need for topical dermatological preparations and nutritional supplements. The adult segment is projected to hold a significant market share since compounding pharmacies can meet adult patients' varied and specialized requirements, including allergies, preferences, genetic variations, or rare disorders. Moreover, there is a significant need for tailored pharmaceuticals among the adult population who are afflicted with chronic illnesses such as cancer, diabetes, and other conditions. These compounded medications are also allergen-free, increasing their demand and expanding the market.

Recent Developments

• September 2023- LO3 Capital, a private investment business dedicated to offering transformative financing to lower-middle market companies, has announced that it has granted a senior subordinated debt investment to Empower Pharmacy (Empower) to support its growth capital needs. Empower, the leading compounding pharmacy and outsourcing facility in the United States provides cutting-edge pharmaceutical solutions to over 15,000 prescribers and 2,000 institutions in every state of the country.
• October 2023- CurifyLabs, a developer of pharmaceutical customization technology, has introduced Pharma Inks that adhere to Good Manufacturing Practice (GMP) standards. These inks enable the on-site manufacture of patient-specific and personalized medicines in compounding pharmacies and hospitals.