In early times, it was the pharmaceutical industry that was responsible for doing research on various drugs, manufacturing the APIs, and production and distribution of medicines worldwide. The scenario has changed widely nowadays. API manufacturers are now located in labor-intensive countries like China where it is easier to set up large production plants and lower labor costs help in cutting down the production cost as well.
As China is also the source of most raw materials for producing APIs, it is a hub of most API manufacturing plants across the globe.
Producing an API is a multi-step process and most APIs are produced as a powder, which is then sold to various multinational drug manufacturers who then add excipient to produce a stable form of a drug that can be packaged and sold.