Drug Discovery Outsourcing Market Size, Share & Trends Analysis Report By Workflow (Lead Identification & Candidate Optimization, Others), By Therapeutics Area (Oncology, Respiratory System), By Drug Type, And Segment Forecasts, 2021 - 2028

Report Overview

The global drug discovery outsourcing market size was valued at USD 3.1 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 7.4% over the forecast period. Pharmaceutical companies are gradually outsourcing R&D activities to academic and private Contract Research Organizations (CROs) to reduce drug development timelines and costs. The pharmaceutical industry has witnessed radical changes in the past two decades, in terms of a shift toward biologics, patent expiration, and unprecedented downsizing of the internal discovery of big pharmaceuticals. All of this has accelerated the adoption of outsourcing activities. An estimated 75.0 to 80.0% of R&D spending in the biopharmaceutical industry can be outsourced, creating opportunities for CROs, which in turn, is expected to boost the market growth.

Moreover, breaking down the different steps of drug discovery, such as hit confirmation, lead generation, lead optimization, and high-speed screening, allows companies to specialize in their core services. Pharmaceutical companies are partnering with manufacturing facilities in emerging countries due to the availability of skilled, low-cost manpower and quality data. Cost-cutting, chasing innovation, gaining access to specialized knowledge and technology, and increasing speed and agility are some of the significant factors encouraging pharma companies to expand the level of outsourcing.

This, in return, is expected to increase competition among key players, leading to the emergence of various new startups across the hotspot regions, such as the U.S., China, India, South Korea, Singapore, and other Southeast Asian countries. For instance, in July 2018, Syngene International Ltd., a leading CRO based in India, extended its R&D collaboration with Baxter Healthcare Corp. until 2024. In March 2018, the company formed a multi-year agreement with GlaxoSmithKline (GSK) to accelerate the discovery of new drug candidates.

The on-going COVID-19 pandemic has slowed down various drug discovery processes owing to the halting of various clinical trials. However, on a brighter note, generous incentives are expected for pharmaceutical companies to invest in developing drugs and vaccines against infectious diseases. Public health challenges in oncology, heart disease, and many other rare conditions still exist. For these, clinical research must go on. Here, CROs are expected to utilize their creativity to the fullest. With an urgent need for an effective vaccine/drug, companies are increasingly opting for outsourcing to enhance their clinical trials, which is expected to boost market growth over the next few years.

Workflow Insights

The lead identification & candidate optimization workflow segment accounted for the highest revenue share of over 32% in 2020. The segment is projected to expand further at a steady CAGR from 2021 to 2028. The iterative process of lead identification, also known as hit-to-lead, is a significant stage in early drug discovery. It has historically proven to have improved efficiencies and economies of scale for drug developers. The introduction of advanced in silico techniques to improve the lead identification process, such as Computer-Aided Drug Discovery (CADD) and structure-based drug designs, support segment growth.

The rising need for skilled resources with combinational knowledge of metabolism, analytical chemistry, and computer software, along with the high cost associated with the integration of the latest computation technology, is enabling higher outsourcing for lead identification services. This, in turn, will fuel the segment growth over the forecast period. The other associated services segment, which includes cell line development, upstream & downstream processes, analytical/bioanalytical methods, formulations & quality assessment, and regulatory assistance, is anticipated to witness the fastest CAGR during the forecast years. This is owing to the increased adoption of outsourcing services and high investments in drug discovery R&D.

Therapeutics Area Insights

The respiratory systems segment accounted for the largest share of 13.75% of the global drug discovery outsourcing market in 2020 High incidence of respiratory disorders, such as bronchitis, tuberculosis, Chronic Obstructive Pulmonary Diseases (COPD), and asthma, and increasing cases of drug resistance have supported the segment growth. The introduction of novel drug delivery technologies, such as nasal sprays, also contributed to the segment’s growth. Lung diseases are responsible for over 700,000 hospital admissions and over 6 million in-patient bed-days in the U.K. per year.

An estimated 1.2 million people suffer from diagnosed COPD in the U.K. Because of this, in 2018, The University of Nottingham formed a strategic research collaboration with GSK and the University of Leicester. The collaboration aimed at accelerating the discovery and development of innovative treatments for COPD. The oncology and anti-infective segments are both projected to witness solid growth rates over the forecast period. Increased focus on the identification of novel targets to support cancer treatment contributes to the growth of the oncology segment.

In June 2020, AstraZeneca collaborated with Accent Therapeutics to discover, develop, and commercialize transformative therapeutics targeting RNA-Modifying Proteins (RMPs) for the treatment of cancer. Antimicrobial resistance is projected to become a global crisis with its growing emergence and spread resulting in a high economic burden. Thus, companies are also focusing on R&D regarding anti-infective drugs, which will boost the segment growth.

Drug Type Insights

The small molecules/pharmaceuticals drug type segment accounted for the largest revenue share of over 77% in 2020 and is projected to register the fastest CAGR during the forecast period. Small molecules play a significant role in the development of innovative treatments for patients worldwide. Sales of half of the specialty medicines are attributable to small molecule applications.

Its role is also visible in the recent approval trends. In 2019, the FDA approved 48 new drugs, 79% of which were composed of small molecules. Small molecules continue to play a vital role in the innovation of treatments across 4 key therapeutic areas: oncology, cardiovascular, autoimmune, and respiratory diseases. Increased significance and highly effective components add up to the potential of small molecules in the pharmaceutical portfolio. All these factors are projected to boost the segment growth.

Furthermore, the advantages of small molecules over larger ones have increased investments in the field, especially in cancer research. Small molecules can be administered orally, especially for the treatment of chronic diseases; they are cheaper, easy to manufacture, and can be combined with intracellular targets. Ongoing studies to investigate and develop novel therapeutics for various indications are expected to further influence segment growth.

Regional Insights

North America dominated the global market in 2020 with a share of over 35%. Factors, such as higher adoption of technological advancements, presence of well-established research infrastructure and key players, and investments in drug discovery R&D, augment the region’s growth. With outsourcing no longer being solely about cost reduction, the rising need for efficiency, quality, and innovation is expected to contribute to the market growth.

Asia Pacific is projected to be the fastest-growing regional market during the forecast period. The region is emerging as a hub for outsourcing drug discovery activities owing to a favorable regulatory environment and easy availability of low-cost skilled manpower and high-quality data. Japan, being the second-largest pharmaceutical market at the global level, is expected to provide a robust opportunity for CROs, thus driving the overall market in Asia Pacific.

Key Companies & Market Share Insights

International partnerships are a key strategy witnessed among players. For instance, CROs in the U.K. are increasingly collaborating with companies in the Swiss pharmaceutical sector. In addition, in a fragmented industry like pharmaceutical, agility becomes vital in the fast-moving drug discovery sector and this can be provided by high-quality service offerings along with a broad portfolio of capabilities. Thus, partnerships with Contract Development and Manufacturing Organizations (CDMOs) are preferred over Contract Manufacturing Organizations (CMOs). Some of the major players in the global drug discovery outsourcing market are:

• Albany Molecular Research Inc.

• EVOTEC

• Laboratory Corporation of America Holdings

• GenScript

• Pharmaceutical Product Development, LLC

• Charles River

• WuXi AppTec

• Merck & Co., Inc.

• Thermo Fisher Scientific Inc.

• Dalton Pharma Services

• Oncodesign

• Jubilant Biosys

• DiscoverX Corporation

• QIAGEN 

Drug Discovery Outsourcing Market Report Scope

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 2016 to 2028. For the purpose of this study, Grand View Research has segmented the global drug discovery outsourcing market report on the basis of workflow, therapeutics area, drug type, and region:

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

  • Target Identification & Screening

  • Target Validation & Functional Informatics

  • Lead Identification & Candidate Optimization

  • Preclinical Development

  • Other Associated Workflow

• Therapeutics Area Outlook (Revenue, USD Million, 2016 - 2028)

  • Respiratory System

  • Pain & Anesthesia

  • Oncology

  • Ophthalmology

  • Hematology

  • Cardiovascular

  • Immunomodulation

  • Anti-Infective

  • Central Nervous System

  • Dermatology

  • Genitourinary System

  • Endocrine

  • Gastrointestinal

• Drug Type Outlook (Revenue, USD Million, 2016 - 2028)

  • Small Molecules

  • Large Molecules (Biopharmaceuticals)

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

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

  • Asia Pacific

    • Japan

    • China

  • Latin America

    • Brazil

  • MEA

    • South Africa