DRUG DISCOVERY OUTSOURCING MARKET ANALYSIS

The global drug discovery outsourcing market was valued at US$ 3,545.9 Mn in 2022 and is forecast to reach a value of US$ 6,262.4 Mn by 2030 at a CAGR of 6.4% between 2023 and 2030. The global drug discovery outsourcing market is experiencing strong growth owing to the rise in focus on drug development and increase in adoption of outsourcing services around the world. Moreover, growing trend of outsourcing and rise in burden of cancer across the globe is expected to boost the growth of the market. However, factors such as high cost of drug development and stringent rule & regulations are expected to hamper the market growth.

Global Drug Discovery Outsourcing Market: Regional Insights

Based on geography, the global drug discovery outsourcing market is segmented into North America, Latin America, Europe, Asia Pacific, Middle East, and Africa.

Among regions, North America is expected to gain highest share in the market during the forecast period owing to the rising incidence of chronic, genetic, respiratory, and other diseases, increasing demand for safe and effective drugs, rising focus on drug development, and increase in research and development in this region. For instance, in September 2022, CytoReason announced multi-year partnership with Pfizer to use CytoReason’s artificial intelligence technology for Pfizer’s drug development programs. The agreement will support the development of additional disease models and the creation of high-resolution models, spanning across a number of therapeutic areas.

Europe and Asia Pacific are also expected to witness robust growth in the global drug discovery outsourcing market owing to the rise in burden of chronic and life-threatening diseases, increasing demand for safe and effective drugs, increasing research and development, increasing focus on the drug development in these regions. For instance, in April 2023, Hamburg is on its way to becoming a leading hub of Europe's academic drug discovery, with the German city's town hall announcing the foundation of European ScreeningPort GmbH (European Centre for Modern Drug Discovery), a company that will run a state-of-the-art drug discovery service centre.

Figure 1. Global Drug Discovery Outsourcing Market Share (%), by Region, 2023

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Global Drug Discovery Outsourcing Market Drivers:

Rise in focus on drug development to propel market growth

One of the key factors expected to propel growth of the global drug discovery outsourcing market over the forecast period is the rise in focus on drug development across the globe. With the rising burden of chronic or life-threatening disease, the demand for safe/effective drugs is also increasing rapidly, which in turn increase the drug development. In May 2023, Google Cloud announced the launch of the two new Artificial Intelligence (AI) powered tools that will help pharma and biotech companies accelerate drug discovery. The suite is designed to help pharma and biotech companies predict and understand the structure of proteins, a vital part of drug development.

Rise in adoption of outsourcing services to boost market growth

Another factor which is driving the growth of the global drug discovery outsourcing market is the rise in adoption of outsourcing services around the world. For instance, in October 2022, Amphista Therapeutics, a biotech company focusing on drug discovery that use targeted protein degradation (TPD), collaborated with Domainex, a medicines research service partner, as a partner to provide integrated drug discovery services for its research programs. Domainex has experience in the field of TPD with expertise in designing, synthesising, and profiling targeted heterobifunctional protein degraders. This in turn is expected to drive market growth.

Global Drug Discovery Outsourcing Market Opportunities:

Rising trend of outsourcing is expected to offer significant growth opportunities for players in the global drug discovery outsourcing market. For instance, drug discovery outsourcing increases the success rate and speed of the drug discovery process. According to article published in December 2022 in the Indian Journal of Pharmacology, outsourcing drug development services has become an important strategy for cost and risk reduction, capacity building, and data generation. Around one-third of the drug development processes are outsourced, and the data generated by independent third parties are well appreciated during regulatory submissions.  

Rise in burden of cancer across the globe is expected to offer significant growth opportunities for players in the global drug discovery outsourcing market. For instance, with the rising incidence of cancer, the demand for safe and effective drugs is also increasing rapidly. In October 2022, Merck and Moderna signed n US$ 250 million agreement to develop and commercialize a cancer vaccine, mRNA-4157/V940. A vaccine is currently being evaluated in Phase II clinical trial in combination with pembrolizumab, Merck’s anti-programmed cell death protein 1 (PD-1), as adjuvant treatment for patients with high-risk melanoma.

Global Drug Discovery Outsourcing Market Trends:

Increase in research and development is a recent trend

Market players are engaged in research and development (R&D) activities for the development of safe and effective drugs to treat chronic, genetic, respiratory, and other diseases or reduce global disease burden. In November 2022, Sanofi and Insilico Medicine signed a US$ 1200 million Drug Development Deal. The agreement will allow Sanofi to use Insilico’s AI platform to advance drug development in up to six new targets. This trend is expected to continue during the forecast period, driving the growth of the drug discovery outsourcing market.

High demand for COVID-19 vaccine is another trend

Drug discovery outsourcing has become a vital aspect of developing effective treatments against viruses. In June 2021, Catalent, Inc. and Moderna, Inc. collaborated up to manufacture Moderna’s COVID-19 vaccine and other investigational programs in Moderna’s pipeline at Catalent’s facility in Bloomington, Indiana. Moreover, with the increasing cases of COVID-19 across the globe, the demand for safe and effective vaccine is also increasing. This trend is expected to continue during the forecast period, driving the growth of the market.

Global Drug Discovery Outsourcing Market Restraints:

High cost of drug development to hinder market growth

One of the key factors expected to hamper growth of the global drug discovery outsourcing market is the high cost of drug development. Drug development is an expensive, time consuming, and a long-term process. Higher costs associated with preclinical studies for drug discovery is the biggest challenge. Companies spend huge on research and development to identify the target and then bind that target to compounds of interests. Many drugs fail in early stage as well as in late stage clinical trials, and pharmaceutical companies spend millions on drug development.

Stringent rule and regulations to hamper market growth  

Another factor which is hampering the growth of the global drug discovery outsourcing market is the stringent rule & regulations for drug manufacturing. Drugs compounded by outsourcing facility are subject to current good manufacturing practice (CGMP) requirements. Drugs compounded by the outsourcing facility can qualify for exemptions from the Food and Drug Administration (FDA) approval requirements and the requirement to label products with adequate directions for use, but not from current good manufacturing practice (CGMP) requirements.

Figure 2. Global Drug Discovery Outsourcing Market Share (%), by Workflow, 2023

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Global Drug Discovery Outsourcing Market Segmentation:

The global drug discovery outsourcing market report is segmented into Workflow, Therapeutic Area, Drug Type, Service Type, End User, and Region.

Based on Workflow, the market is segmented into Target Identification & Screening, Target Validation & Functional Informatics, Lead Identification & Candidate Optimization, Preclinical Development, and Other Associated Workflow. Out of which, Target Identification & Screening Segment is expected to dominate the drug discovery outsourcing market over the forecast period and this is attributed to the rise in drug development worldwide.

Target Validation & Functional Informatics Segment is also expected to witness robust growth in the near future and this is owing to the growing trend of outsourcing.

Based on Therapeutic Area, the market is segmented into Respiratory System, Pain and Anesthesia, Oncology, Ophthalmology, Hematology, Cardiovascular, Endocrine, Gastrointestinal, Immunomodulation, Anti-Infective, Central Nervous System, Dermatology, and Genitourinary System. Out of which, Oncology Segment is expected to dominate the market over the forecast period and this is attributed to the rise in burden of cancer across the globe.

Cardiovascular Segment is also expected to witness significant growth in the near future and this is owing to increasing prevalence of cardiovascular diseases.

Based on Drug Type, the market is segmented into Small Molecule and Large Molecule. Out of which, Small Molecule Segment is expected to dominate the market over the forecast period and this is attributed to the increasing demand for small molecule drugs.

Large Molecule Segment is also expected to witness significant growth in the near future and this is owing to increasing demand for large molecule drugs.

Based on Services Type, the market is segmented into Chemistry Services and Biology Services. Out of which, Chemistry Services Segment is expected to dominate the market over the forecast period and this is attributed to the advances in proteomics and genomics.

Based on End User, the market is segmented into Pharmaceutical & Biotechnology Companies and Academic Institutes. Out of which, Pharmaceutical & Biotechnology Companies Segment is expected to dominate the market over the forecast period and this is attributed to the increase in demand for safe and effective drugs and rise in focus on the drug development.

Academic Institutes Segment is also expected to witness robust growth in the near future and this is owing to increase in research and development.

Global Drug Discovery Outsourcing Market: Key Developments

In January 2022, Shanghai Fosun Pharmaceutical (Group) Co., Ltd. entered into a collaboration agreement with Insilico Medicine, an end-to-end artificial intelligence (AI)-driven drug discovery and development company to advance the discovery and development of drugs targeting a number of different targets globally through the use of AI technology.

In January 2022, Evotec partnered with Eli Lilly and Company for the drug discovery of metabolic diseases. Under the agreement, Evotec will identify potential drug candidates to treat diabetes and chronic kidney diseases from targets selected by either of the companies.

In September 2021, Eurofins and Liverpool ChiroChem Ltd. teamed up to offer improved chemical expertise by accessing Liverpool ChiroChem’s PROTAC linker molecules to augment the unified drug discovery platform, DiscoveryOne.

In July 2022, GenScript ProBio and DAAN Bio Therapeutics entered into a strategic cooperation regarding the development of innovative drug development and discovery.

Global Drug Discovery Outsourcing Market: Key Companies Insights

The global drug discovery outsourcing market is highly competitive. This is attributed to the rise in adoption of outsourcing services, as a result, players in the market are focusing on developing and launching novel drugs in the market.

Some of the key players in the global drug discovery outsourcing market are Curia, Genscript, Evotec, Eurofins Scientific, Laboratory Corporation of America Holdings, among others.

*Definition: Drug discovery outsourcing is a practice used by pharmaceutical and biotechnology companies to reduce the cost of drug development. There are several outsourcing models that have been created over the years to address drug development service needs.