Drug Discovery Services Market Share Will Increase at 14.9% CAGR by 2030

According to Nova one advisor, the global Drug Discovery Services market size is expected to hit around USD 34.2 billion by 2030 from valued at USD 16.9 billion in 2021 and growing at a CAGR of 14.9% from 2022 to 2030.

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The surging investments in the research & development activities by the biopharmaceutical industry are boosting the demand for outsourcing the services related to clinical trials and analytical tests. The growing research activities on the orphan medicines and research on rare diseases is fostering the growth of the global drug discovery services market. The burgeoning demand for the biopharmaceutical drugs is resulting in the rapid growth of the biologics industry across the globe. The biopharmaceuticals alone accounts for around 20% of the pharmaceutical industry. The development of several innovative and effective life-saving drugs in the biologics has fueled its demand and the biologics companies are encouraged for investing in the research and development of new drugs for various common and rare diseases. Moreover, the expiry of patents and surging demand for the biologics in the developing nations is propelling the growth of the global drug discovery services market.

The rising prevalence of carious chronic diseases such as cancer, diabetes, cardiovascular diseases, and respiratory diseases owing to unhealthy food habits, rising pollution levels, and rising consumption of tobacco has significantly contributed towards the growth of the drug discovery services market. Moreover, the rapidly growing geriatric population across the globe and the increased susceptibility of the old age people to various diseases is expected to positively impact the growth of the drug discovery services market in the forthcoming future. As per the United Nations, the geriatric population across the globe is estimated to reach 2 billion by 2050. Furthermore, the active participation of the various authorities like FDA and EMA in the approvals of various newly developed drugs is supporting the growth of the drug discovery services market. Moreover, the presence of numerous contract research organizations across the developed and developing nations is attracting the investments in the research and developmental activities.

Report Scope of the Drug Discovery Services Market

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Global Drug discovery services Market Dynamics

DRIVER: Growing R&D expenditure in the Pharma and Biopharma companies

Most pharmaceutical, biopharmaceutical, and medical device companies invest heavily in developing novel drugs and devices. The pharmaceutical industry is R&D-intensive. Pharmaceutical companies invest in R&D to deliver high-quality and innovative products to the market. Trends suggest that the top pharma companies are increasing their R&D efficiencies through heavy R&D investments to see returns in the longer term and through collaborative R&D efforts. According to the EvaluatePharma report, worldwide pharmaceutical R&D spending was valued at USD 137 billion in 2012; this increased to USD 198 billion in 2020. As a result of the COVID-19 outbreak, the global pharma R&D growth rate dropped to 0.1% in 2020. According to the report, this R&D spend is expected to grow steadily between 2020 and 2026 at a CAGR of 4.2% to reach USD 254.0 billion, slower than the historical CAGR of 4.7% between 2012 and 2020.

The rising R&D expenditure of pharmaceutical and biopharmaceutical companies is prompting them to opt for fully integrated or functional outsourcing services, from the early development stage to the late-stage development phase, for drug discovery and development. As there is enormous pressure on pharma companies to contain fixed costs, outsourcing has evolved as a strategic alternative to overcome the lack of in-house resources required for new product development. Big pharma companies are transitioning to a leaner business model that relies heavily on outsourcing. Most pharmaceutical and biopharmaceutical companies outsource their testing functions during R&D to improve profitability, meet the timelines involved in drug development, and save costs. This is evident from the recent agreements by major pharmaceutical companies with CROs providing drug discovery and development services. Thus, increasing pharmaceutical R&D expenditure supports the growth of the drug discovery services market.

RESTRAINT: Stringent regulations governing drug discovery and animal usage

Securing safety and efficacy is the prime focus of regulatory authorities during drug approval. Although these approaches help ensure the quality of the products launched in the market, they substantially increase the cost of drug development and the final product. In price-sensitive emerging markets, this factor can significantly impact the uptake of a particular drug. Apart from this, various legislations that ensure the quality of the product (such as GMP) often increase manufacturing costs.

Stringent guidelines govern the usage of animals in drug discovery. Mice, rats, fish, amphibians, and reptiles are the commonly used animals in any research. Concerns regarding the ethical use of animals in research have driven governments to introduce legislation for animal safety and use, which presents several challenges to the smooth functioning of drug discovery research. This has forced companies to implement other techniques to minimize animal use. For example, Novo Nordisk uses biosimulation, which involves using computer models to simulate human biology. However, this has not been fully adopted across the industry.

OPPORTUNITY: Growth in drugs and biologics market despite Covid-19 Pandemic

Despite the ongoing COVID-19 pandemic, 2020 has been the second-best year for the pharmaceutical industry regarding the number of drugs approved by the US FDA. This year witnessed the authorization of 53 drugs—a number surpassed only in 2018 with 59 pharmaceutical agents. The 53 approvals in 2020 comprised 40 new chemical entities and 13 biologics (of which ten were monoclonal antibodies, two were antibody-drug conjugates, three were peptides, and two, oligonucleotides). The FDA authorized 160 drugs in the last three years (2018–2020), compared to the approval of only 21 drugs in 2010.

This growth in the number of approved products worldwide is attributed to the rising investments by biopharmaceutical companies to develop biologics and biosimilars. More than half of the drug candidates in the discovery stage are biologics, such as proteins, peptides, and monoclonal antibodies. Biologics are expected to contribute around half of the revenue generated by the top 100 pharmaceutical product sales in 2022.

Although small-molecule drugs dominate the global pharmaceutical market, the share of biologics, biosimilars, and large-molecule drugs is growing, led by the launch of new biologic-based drugs and increased revenues from existing biologics. Biologics and biosimilars require more specialty testing services at each stage than small molecules. The increasing need for outsourcing these services to CROs is expected to stimulate the growth of the drug discovery services market in the coming years

CHALLENGE: Shortage of Skilled Personnel

The global pharmaceutical, biotechnology, and medical device R&D outsourcing industry is constantly evolving. Professionals must keep pace with the continuing changes in pharmaceutical R&D technologies and methodologies, provide quality services, and comply with good laboratory practices. CROs face challenges in attracting and retaining highly skilled professionals as they compete with pharmaceutical and biotechnology companies and academic and research institutions for qualified and experienced scientists.
To compete effectively, companies have to offer higher compensations and other benefits; this may affect the finances and results of operations of players, especially small-scale analytical testing providers. This shortage of skilled professionals may hamper the adoption of new technologies and methodologies and inhibit the growth of the drug discovery services market in the coming years.

Regional Insights

North America was the leading drug discovery services market in 2020. The presence of several top biopharmaceutical and pharmaceutical companies are supported by the numerous CROs and CMOs in the region, which favors the growth of the drug discovery services market. US is the patent holder of the most of the newly developed drugs. Furthermore, the increased prevalence of various chronic diseases and rising geriatric population in US is fueling the growth of the market. According to the Population Reference Bureau, the number of people aged 65 years and above is expected to reach at 95 million in US by 2060. It is estimated that around 60% of the US population is suffering from one or more chronic diseases. The increasing awareness regarding the biologics is boosting the demand for the new and innovative drugs in the region, which in turn is supporting the growth of the drug discovery services market in North America.

Asia Pacific is estimated to be the fastest-growing market during the forecast period. This is attributed to the presence of several top research organizations in the countries like China, India, and South Korea. The rising awareness regarding the biologics among the population in the emerging nations is fueling the demand for the innovative biologic drugs. Moreover, the favorable government policies is attracting FDIs, which is expected to drive the growth of the drug discovery services in Asia Pacific market.

Some of the prominent players in the Drug Discovery Services Market include:

Laboratory Corporation of America Holdings (US), Charles River Laboratories International Inc. (US), WuXi AppTec (China), and Thermo Fisher Scientific Inc (US).

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Nova one advisor, Inc. has segmented the global Drug Discovery Services market

Drug Discovery Market, by Process

• Target Selection
• Target Validation
• Hit-to-Lead identification
• Lead Optimization
• Candidate Validation

Drug Discovery Services Market, by Type

• Chemistry Services
• Biology Services

Drug Discovery Services Market, by Drug Type

• Small-molecule drugs
• Biologics drugs
• Drug Discovery Services Market, by Therapeutic Area
• Oncology
• Infectious and Immune system diseases
• Neurology
• Digestive system diseases
• Cardiovascular diseases
• Other Therapeutic Area (metabolic disorders/endocrinology, respiratory disorders, psychiatry, dermatology, ophthalmology, genitourinary, women’s health, and orphan and rare diseases)

Drug Discovery Services Market, by End user

• Pharmaceutical & Biotechnology companies
• Academic Institutes
• Other End Users (small CROs, IVD companies, and clinical laboratories)

By Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East & Africa

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