The global pharmaceutical analytical testing outsourcing market size was valued at USD 6.54 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 8.3% over the forecast period. Innovation in the pharmaceutical industry, increasing focus on regulation, safety & quality, rising number of end-users, and pricing benefits of outsourcing are the key factors driving the market. Increasing R&D budgets and investments in drug discovery are among the critical sustainability strategies for pharmaceutical companies. Not all companies have an infrastructure that is conducive to all types of analytical testing. Hence, outsourcing these operations is the most suitable option, which also helps save time and cost.
Other factors, such as the increasing need for product safety & quality, along with changing regulations for in vivo and in vitro tests are also expected to propel the growth of the market. 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.
The economic benefits associated with outsourcing these services and approvals in the pharmaceutical industry are projected to support market growth. Quicker and reliable results, data safety, and improved efficiency are some key factors favoring market growth. Innovation or new product development is directly proportional to the demand for testing services. Due to competitive pressures, pricing concerns, and lead-time to market, companies are opting to outsource testing services. According to the Pharma Intelligence Report 2019, the total development pipeline increased to 16,181 molecules in 2019 from 15,267 molecules in 2018.
Increasing focus on customized care and technological advancements are shortening the product lifecycle, which has resulted in the rapid development of new products. The development of combination products, biosimilars, and other innovative medicines has led to an increase in demand for specific types of tests. Outsourcing services are becoming the most preferable option for many pharma companies to increase operational efficiency, therapeutic expertise, and on-demand services along with the expansion of geographical presence.
Pandemic Impact |
Post COVID Outlook |
Business-as-usual operations are also clearly being affected, as companies report that R&D labs are operating at below 50 percent of normal capacity. |
The ongoing pandemic is putting pharmaceutical R&D strategies to the test and also challenging manufacturing planning and supply chain management. Particularly in this industry segment, the supply chain is global, complex, and interconnected. Each link must be strong enough to ensure that the road from lab to final drug product is as smooth as possible, even under the most difficult circumstances. |
Across all R&D-related groups, companies estimate productivity has fallen by between 25 and 75 percent due to remote working. |
Pharmaceutical companies have already begun adopting new R&D tools, paving the way to a new trial paradigm. |
In July 2020, SGS SIGNS ANALYTICAL TESTING AGREEMENT WITH ASTRAZENECA FOR COVID-19 VACCINE CANDIDATE |
Analytical instrumentation is at the heart of every drug discovery and development process. The inherent need for precise and accurate analysis of pharmaceutical and biotherapeutic compounds, combined with strict regulatory environments, ensures that laboratory testing of these materials sits at the forefront of analytical science and innovation. |
In several nations, analytical laboratories are considered to be a part of the essential healthcare infrastructure, thus analytical studies were continued with minimal or no initial disruptions due to COVID-19. As a measure to prevent the spread of the virus and ensure the safety of the employees, most laboratories adopted work shifts or Work From Home (WFH) strategies to ensure the minimum presence of their staff. Furthermore, these laboratories ensured that sanitation and social distancing norms are followed by staff members.
The market comprises many players focusing on specialty services or dealing with end-to-end services. However, large outsourcing companies are looking to acquire high-impact service/manufacturing firms to boost their existing capabilities. A few instances include the acquisition of Clinical Research Laboratories by Eurofins in September 2018, and MPI research by Charles River Laboratories International, Inc., among others.
The other service segment generated the maximum revenue in 2020 and accounted for over 39% of the overall share. The segment includes environmental monitoring, raw material testing, batch release, microbial testing, and physical characterization of the materials. Changing regulations for in vivo & in vitro tests and innovative approaches to reduce the complexity of the tests are contributing to the segment growth.
The bioanalytical testing services segment is expected to witness the fastest growth over the forecast period. The entry of new participants in the market and an increasing number of clinical trial registrations have contributed to the segment growth.
A lot of small-scale industries are not equipped with top-end analytical tools and opt for outsourcing of these studies to industry experts having years of experience in performing, documenting, and adapting to the challenges presented during analysis. This is also anticipated to drive segment growth.
North America accounted for the largest revenue share of over 53% in 2020 and will retain its dominant position throughout the forecast years. This is due to the fact that it is one of the top manufacturing hubs of complex, highly reliable, & high-end pharmaceuticals. The rise in the manufacturing of pharmaceuticals to meet the increasing demand for efficient healthcare in the region is also projected to be one of the major factors propelling the market growth.
Asia Pacific is expected to be the fastest-growing regional market from 2021 to 2028 as a lot of developed countries are investing in countries in this region. Outsourcing services in APAC are usually supported by delivery centers in the Philippines, China, and India. China is gaining popularity as a delivery location for nearshore and onshore clients based out of Japan.
Market players are undertaking various strategic initiatives, such as mergers & acquisitions, collaboration, and service portfolio as well as geographic expansions, to gain a higher market share. For instance, in May 2019, Intertek Group Plc announced the expansion of its pharmaceutical services laboratory in Milbourn, which is likely to open at the end of 2019. In December 2018, SGS SA invested USD 3.84 million to undertake a two-phase expansion project at its laboratory in Poitiers, France, to implement a 50% increase in bioanalytical capabilities at the site by 2020.
Also, Boston Analytical opened a new office in Cambridge, in August 2019, thereby expanding its reach of services. Charles River Laboratories was not as affected by the pandemic as other clinical CRO firms, as nearly all its sites were active during the pandemic. However, the company revised down its 2020 financial guidance by nearly USD 215 million. Also, as a response to the pandemic, PPD adopted a remote working model and transferred its closed/inaccessible site patients to open sites. The company has not provided any financial guidance for 2020. Some prominent players in the global pharmaceutical analytical testing outsourcing market include:
SGS SA
Toxikon, Inc.
Eurofins Scientific
Pace Analytical Services, Inc.
Intertek Group Plc
Pharmaceutical Product Development, LLC.
WuXi AppTec, Inc.
Boston Analytical
Charles River Laboratories International, Inc.
West Pharmaceutical Services Inc.
Report Attribute |
Details |
Market size value in 2021 |
USD 7.08 Billion |
Revenue forecast in 2028 |
USD 12.4 Billion |
Growth Rate |
CAGR of 8.3% from 2021 to 2028 |
Base year for estimation |
2020 |
Historical data |
2016 - 2019 |
Forecast period |
2021 - 2028 |
Quantitative units |
Revenue in USD million/billion and CAGR from 2021 to 2028 |
Report coverage |
Revenue forecast, company ranking, competitive landscape, growth factors, and trends |
Segments covered |
Service, region |
Regional scope |
North America; Europe; Asia Pacific; Latin America; MEA |
Country scope |
U.S.; Canada; U.K.; Germany; France; Italy; Spain; Russia; The Netherlands; Switzerland; Turkey; Sweden; Japan; China; India; Australia; South Korea; Indonesia; Malaysia; Singapore; Thailand; Taiwan; Brazil; Mexico; Argentina; Colombia; Chile; South Africa; Saudi Arabia; UAE; Egypt; Israel |
Key companies profiled |
SGS SA; Toxikon, Inc.; Eurofins Scientific; Pace Analytical Services, Inc.; Intertek Group Plc; Pharmaceutical Product Development, LLC; WuXi AppTec, Inc.; Boston Analytical; Charles River Laboratories International, Inc.; West Pharmaceutical Services Inc. |
Customization scope |
Free report customization (equivalent up to 8 analysts working days) with purchase. Addition or alteration to country & segment scope |
Pricing and purchase options |
Avail customized purchase options to meet your exact research needs. Explore purchase options |
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 pharmaceutical analytical testing outsourcing market report on the basis of service and region:
Service Outlook (Revenue, USD Million, 2016 - 2028)
Bioanalytical
Clinical
Non-clinical
Method Development & Validation
Extractable & Leachable
Impurity Method
Technical Consulting
Others
Stability Testing
Drug Substance
Stability Indicating Method Validation
Accelerated Stability Testing
Photostability Testing
Others
Others
Regional Outlook (Revenue, USD Million, 2016 - 2028)
North America
U.S.
Canada
Europe
U.K.
Germany
France
Italy
Spain
Russia
Turkey
The Netherlands
Switzerland
Sweden
Asia Pacific
China
Japan
India
Australia
South Korea
Indonesia
Malaysia
Singapore
Thailand
Taiwan
Latin America
Brazil
Mexico
Argentina
Colombia
Chile
Middle East & Africa
South Africa
Saudi Arabia
UAE
Egypt
Israel
b. The global pharmaceutical analytical testing outsourcing market size was estimated at USD 6.5 billion in 2020 and is expected to reach USD 7.1 billion in 2021.
b. The global pharmaceutical analytical testing outsourcing market is expected to grow at a compound annual growth rate of 8.3% from 2021 to 2028 to reach USD 12.4 billion by 2028.
b. North America dominated the pharmaceutical analytical testing outsourcing market with a share of 53.9% in 2020. This is attributable to the rapid increase in the manufacturing of pharmaceuticals to meet the rising demand for efficient healthcare.
b. Some key players operating in the pharmaceutical analytical testing outsourcing market include Toxikon, Inc.; Intertek Group PLC; SGS SA; Eurofins Scientific; Boston Analytical; Pace Analytical Services, LLC; West Pharmaceutical Services, Inc.; WuXi AppTec, Inc.; Intertek Group Plc; Pharmaceutical Product Development, LLC; and Charles River Laboratories International, Inc.
b. Key factors that are driving the pharmaceutical analytical testing outsourcing market growth include increasing demand for analytical drugs, biosimilars, and biopharmaceuticals as well as increasing investments in R&D for pharmaceuticals, rising demand for product safety and quality, and changing regulations for in-vivo and in-vitro tests.
b. Asia Pacific is expected to show the fastest growth in the pharmaceutical analytical testing outsourcing market through 2028, owing to the low-cost services being offered by third-party service providers in the region.
b. The pharmaceutical analytical testing outsourcing industry has witnessed a number of acquisitions in recent years, such as that of Clinical Research Laboratories by Eurofins in September 2018, and MPI research by Charles River Laboratories International, Inc.
b. The other services segment, comprising of environmental monitoring, raw material testing, batch release, microbial testing, and physical characterization of the materials, accounted for the largest share of over 39% in the pharmaceutical analytical testing outsourcing market in 2020.
b. The bioanalytical testing services segment is expected to witness the fastest growth in the pharmaceutical analytical testing outsourcing market over the forecast period.
b. The coronavirus pandemic has led to an increased demand for the pharmaceutical analytical testing outsourcing market, owing to an increased focus on R&D activities as well as diagnostic procedures for counteracting the virus.
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