Drug Discovery Services Market: Growth, Size, Share, and Trends

Market Growth Outlook Summary

The global drug discovery services market growth forecasted to transform from USD 20.7 billion in 2024 to USD 41.4 billion by 2028, driven by a CAGR of 14.9%. Opting of services around drug discovery tasks has increased over the years along with the investment in research & development; these are expected to drive market growth. Customers are turning to service providers/contract research organizations due to the costs associated with in-house drug discovery and development. Moreover, advancements in treating diseases are anticipated to boost market expansion. However, a shortage of professionals poses a challenge for outsourcing these activities. Conversely, there is a growing demand, for testing services that could lead to business opportunities.

Attractive Opportunities in the Drug Discovery Services Market

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Drug Discovery Services Market Dynamics

DRIVER: Growing R&D Expenditure in Pharma-Biotech Sector

The upsurge in number of clinical trials registered in the past 10 years has propelled the outsourcing activities around drug discovery. Pharmaceutical companies are investing largely in novel therapeutics development. Biopharmaceutical companies spend resources on research and development to deliver high-quality and innovative products to gain market capital. After studying the recent industry trends, it was observed that the leading pharma companies are increasing their R&D capabilities through significant R&D investments to see capital returns in the long term and through collaborative R&D efforts. In a recent study published by Evaluate Pharma, worldwide pharmaceutical R&D spending was valued at USD 144 billion in 2014, and this figure is estimated to reach USD 285 billion by 2028.

RESTRAINT: Stringent regulations governing drug discovery and animal usage

The major focus of regulatory authorities during drug approval is securing safety and efficacy. Even if these approaches confirm the quality of the products launched in the market, they significantly increase the cost of the drug development process of the final product. For regions with price-sensitive emerging markets, this factor can significantly impact the uptake of a particular drug. Aside from this, multiple legislations that ensure the quality of the product (such as GMP and GLP) usually increase the manufacturing costs. Also, there are strict guidelines govern the usage of animals in drug discovery. Mice, rats, fish, amphibians, and reptiles are the most used animals in any research. Scrutiny regarding the ethical use of animals in research has pushed governments to introduce legislation for animal safety and use, which presents several challenges to the smooth functioning of drug discovery research, and this has reinforced companies to implement other techniques to minimize animal use.

OPPORTUNITY: Technological advancements and new drug discovery techniques

Advent of new technologies is expected to enhance the speed and efficiency of drug- to- market process. Investments in cutting-edge technologies like next-gen proteomics printing of materials, automated lab processes, quantum computing, and DNA technologies for drug development support market expansion. Advanced proteomics tools such as mass spectrometry are recognized for their ability to provide insights, at stages of cancer drug discovery. These tools help in identifying and validating drug targets understanding how drugs work and discovering prognostic biomarkers. 3D-bioprinting technology is considered a powerful tool for building tissue and organ structures for drug discovery. Such advancements in technology will significantly drive the market for drug discovery services.

CHALLENGE: Shortage of Skilled Personnel

The pharmaceutical and biopharmaceutical industry is constantly evolving at a fast pace and professionals need to keep pace with the dynamic changes in the pharmaceutical R&D technologies and methodologies, provide quality services, and comply with good laboratory practices.

Drug discovery service providers encounter challenges, in attracting and retaining trained & skilled professionals due to competition, from pharmaceutical and biotechnology firms well as academic and research institutions for research scientists.

In order to stay competitive businesses must provide salaries and perks which could impact the health and performance of industry players, particularly smaller analytical testing firms. As a result, a shortage of professionals might impede the adoption of technologies and methodologies potentially hindering the growth of the drug discovery services sector, in the future.

Drug Discovery Services: Market Ecosystem

The market ecosystem includes suppliers of materials, drug discovery service providers. End users like pharmaceutical and biotech companies, academic institutions, small CROs (Contract Research Organizations) and clinical laboratories. Raw material suppliers and service providers offer products and services for drug discovery research such as instruments, consumables, assays, kits and accessories for studies like PK/PD (Pharmacokinetics/Pharmacodynamics) ADME (Absorption Distribution Metabolism Excretion) DMPK (Drug Metabolism Pharmacokinetics) among others.

The prominent drug discovery service providers are Laboratory Corporation of America Holdings (US), Eurofins Scientific SE (Germany), Charles River Laboratories International, Inc. (US), Evotec SE (Germany), Wuxi AppTec (China), Syngene International Limited (India), Curia Global Inc. (US), Pharmaron Beijing Co., Ltd. (China), Piramal Enterprises Limited (India), Thermo Fisher Scientific Inc. (US), Jubilant Pharmova Limited (India), GenScript Biotech Corporation (US), Shanghai Medicilon Inc. (China), and Frontage Holdings Corporation (US).

Ecosystem Analysis: Drug Discovery Services Market

Source: Annual Reports, SEC Filings, Investor Presentations, Expert Interviews, and MarketsandMarkets Analysis

Based on type, Chemistry Services segment accounted for the largest market share of the drug discovery services market

The drug discovery services market is divided into chemistry services and biology services based on type. In 2022 the chemistry services segment dominated the market. The growth, in this sector can be attributed to the use of chemistry services in stages of early drug development to produce strong drug candidates. The widespread utilization of chemistry, in institutions biotech firms and major pharmaceutical companies further fuels market expansion. On the hand biology services are projected to experience growth.

Based on drug type, small molecule drugs segment accounted for the largest market share of the drug discovery services market

The drug discovery services market is divided into two segments based on the drug type, biologics and small-molecule drugs. In 2022, small-molecule drug type segment generated the largest revenue in the market. Low cost and convenience of working with small molecules, as well as the growing number of start-ups and new entrants concentrating on the development of small-molecule therapies are some of the attributive factors.

Based on therapeutic area, oncology segment accounted for the largest market share of the drug discovery services market

Based on the therapeutic area, the drug discovery services market is broadly segmented into oncology, infectious diseases, neurological diseases, immunological diseases, endocrine and metabolic diseases, respiratory diseases, digestive system diseases, cardiovascular diseases, genitourinary diseases and women’s health, and other therapeutic areas. Oncology is the largest segment in this market owing to the high incidence of cancer, a growing number of research studies on cancer therapeutics, and the focus on bringing innovative cancer drugs into the market.

The North American market is projected to contribute the largest share for the drug discovery services market.

The global drug discovery services market is segmented into five major regions—North America, Europe, the Asia Pacific, Latin America, and the Middle East & Africa. With an expected share in 2022, North America is the largest geographic market for drug discovery services, followed by Europe. The market is expanding due to robust pharmaceutical sector, novel R&D projects and high expenditures, growth of biosimilars and generics demand. With numerous international pharmaceutical and biopharmaceutical companies having their headquarters there, North America is the largest pharmaceutical market in the world.

The key players in the region includes Laboratory Corporation of America Holdings (US), Charles River Laboratories International, Inc. (US), Thermo Fisher Scientific (US), Frontage Holdings (US), Pfizer, Inc. (US), AbbVie, Inc. (US), Abbott Laboratories (US), and Johnson & Johnson (US). These companies outsource their drug discovery and drug development services to reduce the cost and time of drug development. This is indicative of the growth opportunities in the North American market.

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The drug discovery services market is dominated by a few globally established players such as Laboratory Corporation of America Holdings (US), Charles River Laboratories International Inc. (US), WuXi AppTec (China), and Thermo Fisher Scientific Inc (US), among others, are the key service providers that provided drug discovery services in last few years. The major focus was given to the deals, expansions, and new service launches due to the changing requirements of pharmaceutical and biopharmaceutical companies, academic and research institutes, and other end users across the world.

Scope of the Drug Discovery Services Industry

This report categorizes the drug discovery services market to forecast revenue and analyze trends in each of the following submarkets:

By Process

• Target Selection
• Target Validation
• Hit-to-Lead identification
• Lead Optimization
• Candidate Validation

By Type

• Chemistry Services
• Biology Services

By Drug Type

• Small-molecule drugs
• Biologics

By Therapeutic Area

• Oncology oncology, infectious diseases, neurological diseases, immunological diseases, endocrine and metabolic diseases, respiratory diseases, digestive system diseases, cardiovascular diseases, genitourinary diseases and women’s health
• Infectious diseases
• Neurological diseases
• Immunological diseases
• Endocrine and metabolic diseases
• Respiratory diseases
• Digestive System diseases
• Cardiovascular diseases
• Genitourinary diseases
• Other Therapeutic Area (psychiatry, dermatology, ophthalmology, and orphan and rare diseases)

By End user

• Pharmaceutical & Biotechnology companies
• Academic Institutes
• Other End Users (small CROs, IVD companies, and clinical laboratories)

By Region

• North America
  • US
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Rest of Europe (RoE)
• Asia Pacific (APAC)
  • China
  • Japan
  • India
  • Australia
  • South Korea
  • Rest of Asia Pacific (RoAPAC)
• Latin America (LATAM)
  • Brazil
  • RoLATAM
• Middle East and Africa (MEA)

Recent Developments

• In February 2023, CRL announced an agreement with Flagship Pioneering (US), to accelerate small molecule drug discovery through latter’s Logical AI platform.
• In January 2023, CRL (US) completed acquisition of SAMDI Tech, Inc. (US), which offered CRL expertise in label-free HTS MS platforms and created a comprehensive library of drug discovery solutions.
• In April 2022, Charles River Laboratories (US) and Valo Health, a data-driven AI company, launched Logica, an AI-powered drug discovery services

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