Drug Discovery Services Market Size To Hold USD 75.68 Bn By 2032

The global drug discovery services market size was exhibited at USD 19.37 billion in 2022 and it is expected to hit around USD 75.68 billion by 2032, growing at a CAGR of 14.6% during the forecast period from 2023 to 2032.

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Key Takeaways:

• The North American market is projected to contribute the largest share for the drug discovery services industry.
• Based on type, Chemistry Services segment accounted for the largest market share of the drug discovery services industry
• Based on drug type, small molecule drugs segment accounted for the largest market share of the drug discovery services industry
• Based on therapeutic area, oncology segment accounted for the largest market share of the drug discovery services industry

Increasing research and development investments made by pharmaceutical and biopharmaceutical companies, growing R&D pipeline for pharmaceutical drugs influencing the growth in demand for outsourcing the analytical testing services, global initiatives made for research on rare disease and orphan drugs, and maximized cost of in-house development of drugs are driving the growth for market. Also, technological advancements, the introduction of new drug discovery techniques, the expiry of patents, and rising demand for specialized testing services among end users are expected to offer growth opportunities to players in this market. However stringent regulation concerning animal use for drug discovery and the shortage of skilled professionals prove to be an restraint and challenge for drug discovery service providers.

Global Drug Discovery Services Market Report Scope

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Drug Discovery Services Market Dynamics

DRIVER: Growing R&D Expenditure in Pharma-Biotech Sector

Drug discovery and development have seen significant growth over the last decade in terms of clinical studies and the introduction of novel drug molecules. As per ClinicalTrials.gov, the number of registered studies went up from 32,517 in 2019 to 36,770 in 2022, at a CAGR of 4.2%. Companies operating in the Pharmaceutical and biopharmaceutical industry invest laboriously in developing novel drugs. Biopharmaceutical companies spend resources for research and development to deliver high-quality and innovative products to gain market capital. After studying the recent industry trends, it was observed that the leading pharma companies are increasing their R&D capabilities through significant R&D investments to see capital returns in long term and through collaborative R&D efforts. In a recent study published by Evaluate Pharma, the worldwide pharmaceutical R&D spending was valued at USD 144 billion in 2014, and this figure is estimated to reach USD 285 billion by 2028.

The growing R&D spending by pharmaceutical and biopharmaceutical companies is encouraging them to go for fully integrated or functional outsourcing services for drug discovery and development, from the early development stage to the late-stage development phase. The pharmaceutical companies have budget constraints and need to contain fixed costs, hence outsourcing has evolved as a strategic alternative to overcome the lack of in-house resources required for new product development. Major pharma companies are transitioning to a leaner business model that is dependent heavily on outsourcing. Many pharmaceutical and biopharmaceutical companies prefer to outsource their testing functions during R&D to improve profitability, meet the timelines involved in drug development, and save costs. This can be confirmed 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 market.

RESTRAINT: Stringent regulations governing drug discovery and animal usage

The major focus of regulatory authorities during drug approval is securing safety and efficacy. Even if these approaches confirm the quality of the products launched in the market, they significantly increase the cost of drug development process of the final product. For regions with price-sensitive emerging markets, this factor can significantly impact the uptake of a particular drug. Aside from this, multiple legislations that ensure the quality of the product (such as GMP and GLP) usually increases the manufacturing costs.

Also, there are strict guidelines govern the usage of animals in drug discovery. Mice, rats, fish, amphibians, and reptiles are the most used animals in any research. Scrutiny regarding the ethical use of animals in research has pushed governments to introduce legislation for animal safety and use, which presents several challenges to the smooth functioning of drug discovery research, and this has reinforced companies to implement other techniques to minimize animal use. For example, Novo Nordisk uses biosimulation, which uses computer models to simulate human biology. However, this has not been fully adopted across the industry.

Computer modeling is another new technology used to predict drug metabolism. However, this computer modeling technique, in silico, is still gaining support and remains in the early phase of industry adoption. It is being tested and is not expected to surpass animal testing during the forecast period fully. The viability of these AI models compared to animal models is being studied; hence, while animal usage concerns may be bypassed in the future, they are expected to restrain the market over the forecast period.

OPPORTUNITY: Technological advancements and new drug discovery techniques

Technological innovations play a significant role in increasing the efficiency and time-to-market for new drugs that are being discovered. Larger CROs have been at the forefront of this innovation. Some prominent solutions have been listed below:

• Next-generation proteomics: Proteomics technologies such as mass spectrometry are being considered powerful tools to deliver significant insights across every stage of the oncology drug discovery pipeline—for instance, helping uncover and validate novel drug targets, helping to understand drug mechanisms of action, and helping identify novel diagnostic, prognostic, or predictive biomarkers, etc.
• 3D-bioprinting to create advanced drug models: 3D-bioprinting technology is considered a powerful tool for building tissue and organ structures for drug discovery. In general, bioprinting uses a 3D printer to accurately deposit cells and biomaterials into precise geometries to create anatomically correct biological structures. While traditional 3D printing uses metals, plastics, and polymers, bioprinting deals with living cells and biological matrices. Hence, there are significant challenges to transitioning from traditional 3D printing to bioprinting and ultimately achieving functional outcomes in bioprinted tissues.
• Lab robotization and automation: Several companies are investigating lab automation and robotization with the help of AI for drug discovery. These include Strateos (US), Emerald Cloud Lab (US), and Arctoris Pte Ltd (Singapore), which are focused on AI-driven automated and robotized labs for drug discovery.
• Quantum theory and quantum computing: The traditional computational method for modeling in synthetic and organic chemistry, medicinal chemistry, and drug design is molecular mechanics (MM). However, molecular mechanics has some limitations when studying electron-based properties within the drug-receptor microenvironment. Quantum mechanical (QM) methods substantially increase the accuracy of predictions and provide much more relevant models of chemical and biological objects and their interactions, but QM methods are costlier.
• Cell-free DNA for drug discovery & Development: Cell-free DNA (cfDNA) will be central in identifying protein targets in the oncology area, assessing the efficacy of drugs targeting them in clinical trials, and identifying optimal combination therapies.

Such advancements in technology will significantly drive the market for drug discovery services.

CHALLENGE: Shortage of Skilled Personnel

The pharmaceutical and biopharmaceutical industry is constantly evolving at a fast pace and professionals need to keep pace with the dynamic changes in the pharmaceutical R&D technologies and methodologies, provide quality services, and comply with good laboratory practices. The drug discovery service providers face problems in gaining and retaining well trained and skilled professionals as they compete with pharmaceutical and biotechnology companies and academic and research institutions for qualified and experienced scientists.

To compete efficiently, 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. Thus, shortage of skilled professionals may hamper the adoption of new technologies and methodologies and inhibit the growth of the market in the coming years.

The North American market is projected to contribute the largest share for the drug discovery services industry.

The global drug discovery services market is segmented into five major regions—North America, Europe, the Asia Pacific, Latin America, and the Middle East & Africa. North America is the largest regional market for drug discovery services, with an estimated share in 2022, while Europe is the second-largest market. A well-established pharmaceutical industry, ongoing R&D studies, high R&D expenditure, growth in the biosimilars and generics markets, and the rising outsourcing of R&D services by pharmaceutical and biopharmaceutical companies in the region are driving the market growth. North America is the largest pharmaceutical market in the world, with many global pharmaceutical and biopharmaceutical giants headquartered in the region, such as Laboratory Corporation of America Holdings (US), Charles River Laboratories International, Inc. (US), Thermo Fisher Scientific (US), Frontage Holdings (US), Pfizer, Inc. (US), AbbVie, Inc. (US), Abbott Laboratories (US), and Johnson & Johnson (US). These companies outsource their drug discovery and drug development services to reduce the cost and time of drug development. This is indicative of the growth opportunities in the North American market.

The drug discovery services market is dominated by a few globally established players such as Laboratory Corporation of America Holdings (US), Charles River Laboratories International Inc. (US), WuXi AppTec (China), and Thermo Fisher Scientific Inc (US), among others, are the key service providers that provided drug discovery services in last few years. Major focus was given to the deals, expansions, and new service launches due to the changing requirements of pharmaceutical and biopharmaceutical companies, academic and research institutes, and other end users across the world.

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Recent Developments of Drug Discovery Services Industry

• In February 2023, Charles River Laboratories (US) announced a multi-program agreement with Pioneering Medicines, an initiative of Flagship Pioneering (US), allowing access to its Logica AI platform to discover small-molecule drugs.
• In February 2023, Evotec SE (Germany) and Related Sciences (US) expanded their partnership for an integrated multi-target drug discovery agreement. The two companies aimed to select, discover, and develop precisely targeted medicines for unmet patient needs.
• In January 2023, Charles River Laboratories (US) acquired SAMDI Tech, Inc. (US), which offers label-free HTS solutions for drug discovery research. The acquisition offered CRL expertise in label-free HTS MS platforms and created a comprehensive library of drug discovery solutions.
• In April 2022, Charles River Laboratories (US) and Valo Health, a data-driven AI company, launched Logica, an AI-powered drug discovery services

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

• Abbott Laboratories Inc.
• Advinus Therapeutics
• Agilent Technologies Ubiquigent
• Albany Molecular Research Inc.
• AstraZeneca PLC
• Aurigene
• Bayer AG
• Charles River Laboratories International
• ChemBridge Corporation
• Covance

Segments Covered in the Report

This report forecasts revenue growth at country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2020 to 2032. For this study, Nova one advisor, Inc. has segmented the Global Drug Discovery Services market.

By Process

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

By Type

• Chemistry Services
• Biology Services

By Drug Type

• Small-molecule drugs
• Biologics

By Therapeutic Area

• Oncology oncology, infectious diseases, neurological diseases, immunological diseases, endocrine and metabolic diseases, respiratory diseases, digestive system diseases, cardiovascular diseases, genitourinary diseases and women’s health
• Infectious diseases
• Neurological diseases
• Immunological diseases
• Endocrine and metabolic diseases
• Respiratory diseases
• Digestive System diseases
• Cardiovascular diseases
• Genitourinary diseases
• Other Therapeutic Area (psychiatry, dermatology, ophthalmology, and orphan and rare diseases)

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 (MEA)

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