Drug discovery outsourcing has significantly benefitted pharmaceutical companies by offering cost-effective discovery and development solutions without heavy capital investments. These services range from target validation, hit identification, lead optimization to pre-clinical development. Outsourcing helps pharmaceutical companies to focus on key competencies and delegate non-core activities to specialized contract research organizations (CROs). This allows smaller biotech companies to leverage the expertise of large CROs and accelerate their pipeline development.
The global Drug Discovery Outsourcing Market is estimated to be valued at Us$ 3825.2 Mn in 2023 and is expected to exhibit a CAGR Of 5.6% over the forecast period 2023 To 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends
Target Identification and Validation has been a major focus area for CROs. They are providing screening of compound libraries against disease specific protein and nucleic acid targets for hit generation. Tools like CRISPR enable rapid target validation to accelerate candidate selection. In addition, machine learning and AI are finding increasing applications in areas like predictive toxicology and data analysis to speed up discovery workflows. Collaboration models are also evolving with CROs forming strategic alliances with biotechs to jointly pursue high value targets. This integrated approach leverages complementary capabilities across the value chain.
Threat of new entrants: Low barriers to entry as the market is highly fragmented with many small and medium sized players worldwide. However, existing established players continue to hold a dominant market share.
Bargaining power of buyers: Pharmaceutical companies have significant bargaining power as they outsource discrete research tasks or whole projects to contract research organisations. They can switch between different CROs easily.
Bargaining power of suppliers: Suppliers of tools, technology and expertise have moderate bargaining power. While they rely on large pharmaceutical players, their technical know-how is valuable for drug development.
Threat of new substitutes: Threat of substitute is low as drug development requires specialised technical and regulatory knowledge that is difficult to replace. However, in silico methods continue to emerge as alternatives to physical experiments.
Competitive rivalry: Intense competition among CROs due to fragmentation and commoditization of early stage outsourcing. Larger players acquire smaller ones to expand capabilities and geographic reach.
The Global Drug Discovery Outsourcing Market Size is expected to witness high growth over the forecast period driven by increasing R&D expenditure of big pharma and biotech companies.
North America dominates current market share due to presence of large pharmaceutical companies and availability of technical expertise in the US and Canada. The Asia Pacific region is expected to grow at the fastest pace during the forecast period led by countries like India and China owing to low cost of operations and strong talent pool.
Key players operating in the Drug Discovery Outsourcing market include Sigma-Aldrich Corporation, Biotain Pharma Co., Ltd, New Zealand Health Food Company Limited, XABC Biotech Co., Ltd., and BIOFAC A/S. Key players are focusing on expanding service portfolios and global footprint through acquisitions to leverage outsourcing opportunities in molecular screening, analytical services and clinical research.
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it