Increasing Competition and Lack of Adequate Resources in Pharmaceutical Sector to Augment Market Growth

Over the past decade, due to increasing competition, players involved in the biotech and pharmaceutical sector are primarily focusing on research and development activities to gain a competitive edge. In addition, economic environment, along with fast-paced developments on the technological front have accelerated internal as well as external innovations in the pharmaceutical space due to which, drug discovery outsourcing has gained considerable traction. External innovations largely occur in various forms at various places, including research laboratories, university labs, contract research organizations, and venture capital-based startups.

Over the past couple of decades, various challenges within the pharmaceutical sector have been well documented and point toward few key areas. The development of new drugs continues to head toward steep costs, the market competition from generics continues to grow, investors expect higher returns, and rising consumer complaints regarding high costs of drugs have led to the growth of the drug discovery outsourcing. This trend is likely to continue during the forecast period. Pharmaceutical companies are increasingly focusing on improving the efficacy of drug development and discovery.

Major developments that are likely to gain considerable traction over the next few years across the drug discovery outsourcing market include a decline in time utilized for drug development, improving the conversion rate of hits to leads, and expanding the number of high-quality compounds. At the back of these factors and evolving economic landscape, the global drug discovery outsourcing market is expected to reach ~US$ 12.7 Bn by the end of 2030.

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Cost Benefits Associated with Drug Discovery Outsourcing to Increase Adoption

Biotech and pharmaceutical companies have consistently expressed high levels of interest in drug discovery outsourcing due to immense cost saving and various other benefits over in-house manufacturing. As per current trends, the number of small and medium-sized businesses operating in the drug discovery outsourcing market is expected to remain higher than that of larger entities due to the low number of stakeholders and fewer organizational barriers in decision-making. In addition, apart from minimizing organizational complications, small and medium-sized companies are increasingly relying on drug discovery outsourcing for product manufacturing and development due to various factors, including insufficient production ability and lack of technical expertise. These factors, along with mushrooming costs of research and development activities continue to accelerate the overall growth of the global drug discovery outsourcing market.

Challenges in Modern-day Pharmaceutical Sector and Technological Advancements Redefine Drug Development

The modern-day pharmaceutical is marred with several challenges in the drug development phase and requires considerable changes. Due to mounting challenges in drug development, drug development as well as drug discovery activities are increasingly being outsourced. Pricing pressure remains the major factor that is likely to trigger the tectonic shift in drug discovery outsourcing during the forecast period. High profit margins of pharmaceutical companies have attracted the attention of healthcare providers to add pressure pertaining to costs and reimbursement. In addition, as a result, as profit margins continue to decline several companies are evaluating the possibility of outsourcing drug discovery to third party organizations that have been equipped with required resources.

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Technological advancements have played a key role in accelerating innovations in the past decade and the trend is likely to continue in the upcoming decade. Due to fast-paced development in technology, competition in the drug discovery and drug development sectors has increased at a rapid pace. Due to the cutthroat competition, several companies in the drug discovery outsourcing market are increasingly joining hands with third-party companies to develop various cost-effective drugs.

Outsourcing of COVID-19 Drugs on Rise amid Pandemic

The ongoing COVID-19 pandemic is expected to have a low impact on the overall prospects of the global drug discovery outsourcing market. In addition, the outsourcing of drugs and medications required to manage COVID-19 infections is expected to witness considerable growth during the COVID-19 pandemic. Pharmaceutical companies are likely to turn toward domestic players for drug discovery outsourcing rather than businesses based in other regional markets. Logistical challenges, along with trade restrictions could possibly pose a barrier in the supply chain.

In addition, as the number of COVID-19 patients continues to swell around the world, pharmaceutical companies are increasingly relying on drug discovery outsourcing to fulfill the soaring demand. Several companies are expected to invest resources in research and development activities that focus on the discovery of a vaccine for the COVID-19 coronavirus. The ongoing investments in research coupled with high demand for medication to treat COVID-19 patients is expected to play a key role in boosting the growth of the drug discovery outsourcing market during the COVID-19 pandemic.

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Analysts’ Viewpoint

The global drug discovery outsourcing market is expected to grow at an impressive CAGR of 10% during the forecast period. The market growth can be attributed to increase in research and development costs, rise in competition in the pharmaceutical sector, consumer demand for low-cost and efficient medication, and advancements in technology. Small to medium-sized pharmaceutical companies are increasingly turning to drug discovery outsourcing due to lack of adequate production capabilities & resources and lack of expertise. Although several larger companies are also expected to follow a similar path, organizational complications and discrepancies among shareholders could possibly slow down the process.

Drug Discovery Outsourcing Market: Overview

  • The global drug discovery outsourcing market was valued at ~US$ 4.5 Bn in 2019. It is projected to expand at a high CAGR from 2020 to 2030. Drug discovery contract research organizations (CROs) are engaged in offering a range of research services on a contract basis to pharmaceutical and biotechnology companies for drug discovery.
  • Rise in demand for drug discovery outsourcing can be attributed to the increase in focus of pharmaceutical companies on research and development and rise in focus on the development of novel drugs to meet the unmet clinical needs in various therapeutic areas including cancer, neurological disorders, and chronic diseases.

Drug Discovery Outsourcing Market: Segmentation

  • The global drug discovery outsourcing market has been segmented based on service type, drug type, therapeutic area, and region
  • In terms of service type, the global drug discovery outsourcing market has been categorized into biological services, chemical services, lead identification & screening, lead optimization, and others. The chemical services segment dominated the global drug discovery outsourcing market, in terms of value, in 2019. However, the biological services segment is likely to expand at a high CAGR during the forecast period.
  • Based on drug type, the global drug discovery outsourcing market has been classified into small molecules and large molecules. The small molecules segment dominated the drug discovery outsourcing market in 2019 and is likely to remain dominant in the forecast period. In terms of therapeutic area, the global drug discovery outsourcing market has been divided into respiratory system, anti-infective, oncology, cardiovascular, gastrointestinal, central nervous system, immunomodulation, and others. Oncology segment dominated the global drug discovery outsourcing market in 2019.

Drug Discovery Outsourcing Market: Regional Segmentation

  • In terms of region, the global drug discovery outsourcing market has been classified into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa
  • North America dominated the global drug discovery outsourcing market in 2019, and the trend is expected to continue during the forecast period. Expansion of the drug discovery outsourcing market in the region can be attributed to an increase in focus on discovering medicines for the treatment of rise in pandemic, which has resulted in drug discovery outsourcing to companies equipped with AI technology. Additionally, an increase in investments in research & development (R&D) by large pharmaceutical and biotechnology companies and their focus on streamlining internal costs leading to the drug discovery outsourcing process fuels the market.
  • The drug discovery outsourcing market in Asia Pacific is anticipated to expand at a high CAGR from 2020 to 2030. Expansion of the drug discovery outsourcing market in the region can be attributed to an increase in focus of pharmaceutical companies on the region as a favorable site for drug discovery outsourcing processes.

Drug Discovery Outsourcing Market: Major Players

  • Key players operating in the global drug discovery outsourcing market include 
    • CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
    • WuXi AppTec Co., Ltd.
    • Albany Molecular Research Inc. (AMRI)
    • GVK Biosciences Private Limited
    • Sygnature Discovery
    • Pharmaron Beijing Co., Ltd
    • WuXi Biologics (Cayman), Inc.
    • Domainex Ltd.
    • Thermo Fisher Scientific, Inc.
    • Jubilant Biosys Ltd.
    • Evotec SE
    • Eurofins Discovery, 
    • GenScript Biotech Corporation
  • The market players in the drug discovery outsourcing market have been adopting inorganic growth strategies to consolidate their position in the global drug discovery outsourcing market. For instance, in February 2020, Charles River acquired Citoxlab for US$ 510 Mn. Citoxlab is a non-clinical CRO company that specializes in regulated safety assessment services, nonregulated discovery services, and medical device testing. In January 2018, Spectris acquired Concept Life Sciences from Equistone Partners Europe. Concept Life Sciences is the U.K.-based provider of drug discovery, development, analytical testing, and environmental consultancy services drug discovery and development services.

Drug Discovery Outsourcing Market – Scope of the Report

TMR’s report on the global drug discovery outsourcing market studies the past as well as current growth trends and opportunities to gain valuable insights of these indicators for the global market during the forecast period from 2020 to 2030. The report provides the overall revenue of the global drug discovery outsourcing market from 2018 to 2030, considering 2019 as the base year and 2030 as the forecast year. The report also provides the compound annual growth rate (CAGR) for the global drug discovery outsourcing market for the forecast period.

The report has been prepared after an extensive research. Primary research involved bulk of research efforts, wherein analysts carried out interviews with market leaders and opinion makers. Secondary research involved referring to key players’ product literature, annual reports, press releases, and relevant documents to understand the global drug discovery outsourcing market.

Secondary research also included Internet sources, statistical data from government agencies, websites, and trade associations. Analysts also employed a combination of top-down and bottom-up approaches to study various phenomena in the global drug discovery outsourcing market.

The report delves into the competition landscape of the global drug discovery outsourcing market. Key players operating in the global drug discovery outsourcing market have been identified and each one of these has been profiled for its distinguishing business attributes. Company overview, financial standings, recent developments, and SWOT are some of the attributes of players profiled in the global drug discovery outsourcing market report.

Key Questions Answered in Drug Discovery Outsourcing Market Report

  • What will be the sales revenue generated by drug discovery outsourcing across all regions during the forecast period?
  • What are the key trends in the global drug discovery outsourcing market?
  • What are major drivers, restraints, and opportunities in the global drug discovery outsourcing market?
  • Which regional market is set to expand at the fastest CAGR during the forecast period?
  • Which therapeutic area segment will generate the maximum revenue by 2030 and which service type segment will expand at the fastest CAGR during the forecast period?

Drug Discovery Outsourcing Market – Research Objectives and Research Approach

The comprehensive report on the global drug discovery outsourcing market begins with an overview of the market, followed by the scope and objectives of the study. Following this, the report provides detailed explanation of the objectives of the study and healthcare compliances laid down by accredited agencies in the purview of research in the global drug discovery outsourcing market. It is followed by market introduction, market dynamics, and an overview of the global drug discovery outsourcing market, which includes TMR’s analysis of market drivers, restraints, and trends affecting the market. Furthermore, Y-o-Y growth analysis with elaborate insights has been provided to understand the Y-o-Y growth trends of the global market. The next section of the global drug discovery outsourcing market report highlights USPs, which include key mergers & acquisitions, technological advancements in drug discovery, Drug Discovery Process – an Overview, COVID-19 Pandemics Impact on Drug Discovery Outsourcing Industry, overview of companies outsourcing to CROs, Overview: Integrated Drug Discovery (IDD) outsourcing- trends, competition, business models preferred, type of projects outsourced, and Porter’s Five Force Analysis in the global drug discovery outsourcing market.

For reading comprehensibility, the report has been compiled in a chapter-wise layout, with each section divided into smaller sections. The entire report comprises an exhaustive collection of graphs and tables that are appropriately interspersed in the entire compilation. Pictorial representation of actual and projected values of key segments is visually appealing to readers. This also allows comparison of market shares of key segments in the past and at the end of the forecast period.

Revenue generated by key players in the global drug discovery outsourcing market has been mapped to ascertain the size of the market in terms of value. The forecast presented here assesses the total revenue generated in the global drug discovery outsourcing market. In order to provide an accurate forecast, we initiated by sizing up the current drug discovery outsourcing market with the help of the parent market.

The report analyzes the global drug discovery outsourcing market in terms of service type, drug type, therapeutic area, and region. Key segments under each criteria have been studied at length and the market share of each of these by the end of 2030 has been provided. These valuable insights would help market stakeholders in making informed business decisions for investments in the global drug discovery outsourcing market.

Drug Discovery Outsourcing Market – Segmentation

Service Type

Biological Services

Chemical Services

Lead Identification & Screening

Lead Optimization

Others

Drug Type

Small Molecules

Large Molecules

Therapeutic Area

Respiratory System

Anti-infective

Oncology

Cardiovascular

Gastrointestinal

Central Nervous System

Immunomodulation

Others

Region

North America

Europe

Asia Pacific

Latin America

Middle East & Africa

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