Biotechnology & Pharmaceutical Services Outsourcing Market Size, Share & Trends Analysis Report By Service (Consulting, Auditing And Assessment, Regulatory Affairs), By End Use (Pharma, Biotech), And Segment Forecasts, 2021 - 2028

Report Overview

The global biotechnology and pharmaceutical services outsourcing market size was valued at USD 62.0 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 5.8% from 2021 to 2028. Rising pricing pressure, lack of internal capabilities, low-cost service offerings by CROs and CMOs, and access to industry experts are expected to drive the market over the forecast period. In addition, rising drug development costs, higher failure rates, and growing regulatory pressure have a significant impact on market dynamics, accelerating the growth rate. Furthermore, well-established Clinical Research Organizations (CROs), regulatory outsourcing firms, management consulting firms, and contract manufacturers are catering to the complex demand of the pharmaceutical and biotechnological sectors.

Contract research and manufacturing companies are investing in personnel, infrastructure, and technology in order to acquire a significant revenue share in the healthcare outsourcing market. Increasing demand due to the ongoing patent cliff of the biotechnology drugs is anticipated to fuel demand. An increasing number of end-to-end service providers to meet the rising demand for low-cost drug development and manufacturing is further anticipated to propel the growth of the market. Moreover, novel drug delivery mechanisms and new product launches are anticipated to drive the outsourcing demand. 

Many companies are opting for outsourcing owing to increasing competition in the healthcare industry. For instance, in August 2020, Pfizer Inc. signed a three-year agreement with PPD, Inc. to provide drug development services. Technological advancements and focus on customized care shorten a product’s life cycle, which leads to the rapid development of new products. Increasing R&D activities for new drug development, combination products, and other advanced medicines have increased the demand for contract biotechnology/pharmaceutical services.

Currently, the global pharmaceutical industry has the second-highest R&D intensity measures of any sector, which indicates that the spending on R&D is increasing and the overall R&D spending is likely to grow during the forecast period. According to Evaluate Pharma in 2019, the pharmaceutical R&D spend was about USD 179 billion in 2018 and is expected to expand at a CAGR of 3.0% between 2018 and 2024. Growing R&D on large molecules has increased the demand for contract services. Thus, increasing R&D spending is expected to particularly drive the biotechnology services outsourcing market during the forecast period.

COVID19 impact: Consulting services to generated highest revenue of 12.0 billion in 2020

The coronavirus outbreak is having a considerable impact on biotechnology and pharmaceutical services outsourcing. Restrictions on movement and stay-at-home orders are helping reduce the spread of COVID-19. However, this is creating an obstacle in clinical trials and other services intended to find effective treatments for various diseases. The integrity of over 330,000 clinical trials registered on Clinicaltrials.gov remains vulnerable as the novel coronavirus continues to spread worldwide. As of March 26, 2020, at least 18 pharma or biotech companies reported disturbance in drug development as a result of the pandemic. The shift in the focus of biopharmaceutical companies on developing vaccines and therapies in response to COVID-19 has resulted in unintended consequences that may potentially disrupt outsourcing. For instance, IQVIA’s Q1 results revealed that nearly 80% of its sites were inaccessible. However, the company accessed nearly 70% of its sites in Q2 and gained full access by Q4. Furthermore, the company projected 10% less revenue in 2020, as compared to the previous year’s guidance.

Service Insights

Consulting services held the largest revenue share of over 15.0% in 2020. This can be attributed to the increasing M&A activities and constantly changing regulatory protocols. For instance, the government of China issued a notification to upgrade the quality of generic drugs, remove the backlog of drug applications, improve the quality and transparency of the review and approval process, and encourage new drug R&D in line with global development. Moreover, the pharma and biotech market has witnessed the continuous entry of new players such as Signa Medical Writing; bioSyntagma; and Fieve Clinical Research, Inc. These players need to be compliant with set standards and norms, for which consulting is essential as these new entrants lack in such capabilities.

The other services segment is expected to expand at the highest CAGR over the forecast period owing to rising outsourcing of generics and biosimilar manufacturing as CMOs are offering services at a lower cost. The others segment is inclusive of contract manufacturing, product upgrade, and IT consulting.

End-use Insights

The pharma segment held the largest revenue share of over 55.0% in 2020 and is expected to maintain its lead throughout the forecast period. The segment is also expected to witness the fastest growth over the forecast period. Contract service providers are recognized as an effective strategic decision to curb the issues of drug shortfall and high production costs and meet the growing demand.

Lack of resources has prompted many pharmaceutical companies to outsource drug development and manufacturing of their products to CROs and CMOS. The CROs and CMOs offer highly sophisticated development and manufacturing services, such as preclinical development, clinical development, commercial manufacturing, clinical manufacturing, precision injection molding, high-speed automation, assembly, fill/finish, and others for a range of pharma products.

Regional Insights

North America dominated the market with a revenue share of over 50.0% in 2020 owing to the presence of several established CROs and CMOs such as Covance Inc.; IQVIA; Catalent; and Samsung Biologics and growing R&D investments by life sciences and pharmaceutical companies in the region. In addition, the expansion of foreign CMOs and CROs into the country is expected to propel the market growth. For instance, in September 2019, Bora Pharmaceuticals received FDA approval for its CMO services and in October 2019, it opened a sales office in Delaware to expand its presence outside Asia and strengthen its market position.

Asia Pacific is anticipated to witness the highest growth over the forecast period. Low cost of drug development and manufacturing and availability of skilled workforce is likely to foster contract development and manufacturing in this region. Moreover, economic policy reforms in countries, such as China, are anticipated to create an open and balanced economy, which presents ample opportunity for market players to invest in this region. In July 2017, Novotech expanded its site management services in Korea with the launch of Novotech SMO Korea Co. Limited.

Key Companies & Market Share Insights

Companies are adopting mergers and acquisitions, regional expansion, service portfolio expansion, and competitive pricing as the key strategies to sustain in the highly competitive environment and acquire a greater market share. In February 2018, Charles River Laboratories acquired MPI research with a consolidated amount of USD 800 Mn. This is expected to increase its offerings in the analytical testing domain.

Similarly, services such as training and education are also expected to gain momentum. The growing complexity is expected to lead to discrepancies in understanding between the healthcare industries and to help minimize the discrepancy, educating personnel is of utmost importance. For instance, in February 2017, NSF International announced a partnership with the Indian Drug Manufacturers’ Association (IDMA). As part of the agreement, NSF International will offer a customizable program for Pharmaceutical Quality Management (PQM) education in India. Some prominent players in the global biotechnology and pharmaceutical services outsourcing market include:

• The Quantic Group

• IQVIA

• Parexel International Corporation

• Lachman Consultant Services, Inc.

• GMP Pharmaceuticals Pty Ltd.

• Concept Heidelberg GmbH

• Covance Inc.

• Charles River Laboratories

• PRA Health Sciences

• ICON plc

Biotechnology & Pharmaceutical Services Outsourcing Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2028. For the purpose of this study, Grand View Research has segmented the global biotechnology and pharmaceutical services outsourcing market report on the basis of service, end use, and region:

• Service Outlook (Revenue, USD Million, 2016 - 2028)

  • Consulting

    • Regulatory Compliance

    • Remediation

    • Quality Management Systems Consulting

    • Others

  • Auditing and Assessment

  • Regulatory Affairs

    • Clinical Trial Applications & Product Registration

    • Regulatory Writing & Publishing

    • Legal Representation

    • Others

  • Product Maintenance

  • Product Design & Development

  • Product Testing & Validation

  • Training & Education

  • Others

• End-use Outlook (Revenue, USD Million, 2016 - 2028)

  • Pharma

  • Biotech

• Regional Outlook (Revenue, USD Million, 2016 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

  • Asia Pacific

    • India

    • China

    • Japan

    • Australia

    • South Korea

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE