The global drug discovery outsourcing market will reach $14.9BN in 2014

Monday 10 March 2014, Amsterdam

A new report predicts the global drug discovery outsourcing market will reach $14.9bn in 2014. That industry generated $11.5bn in 2012, and its revenues will show strong growth to 2024. That revenue forecast and others appear in the new report Drug Discovery Outsourcing: World Market Forecast 2014-2024 & Future Prospects for Leading Companies.

The cost of taking a drug to the market has risen rapidly over the past three decades, with development costs for a drug now estimated to be anywhere between $800m and $1bn. Given the estimate that only one in 10,000 compounds evolves into a viable product, the pharmaceutical industry’s attitude towards outsourcing has changed over the last two decades with outsourcing now viewed as a critical tactic in cost saving. The shift from tactical outsourcing to strategic outsourcing to provide long-term cost savings to pharma companies will help the drug discovery outsourcing industry to grow during the forecast period. The pharmaceutical industry has invested a large amount of money into R&D over the past few decades but the number of novel drug entities reaching the clinic has declined. This challenge has forced the industry to re-examine its operations. By placing increasing emphasis on early drug discovery outsourcing, rather than clinical research, pharma companies are able to reduce costs in the long term by reducing later stage failures.

Moses Akintomide-Akinwamide, a pharmaceutical and medical technology industry analyst, observes: “The pharmaceutical industry has been gradually shifting from the traditional blockbuster business model which relied on vertical integration of resources to a more distributed model which recognises the importance of outsourcing certain functions to CROs. As this trend continues, the drug discovery outsourcing market will experience growth in the coming years. The environment for greater investment in early stage new drug development will begin to improve from 2014 onwards. In addition to outsourcing non-core competencies, the next few years will see greater emphasis being placed on patient stratification and targeted therapy.”

“Strong growth in the biology services sector of the drug discovery outsourcing market in the next decade will be stimulated by increased use of biological and targeted therapies and advances in molecular biology. The lead optimization sector will also experience strong revenue growth, driven by pharma’s quest to avoid the cost of late development stage failure by installing early measures such as ADME Tox testing.”

The leading developed countries present the greatest demand for drug discovery outsourcing services. The US market currently holds the largest share of the global market. A major factor contributing to the dominance of the US drug discovery outsourcing market is the fact that the country has the largest pharmaceutical market in the world; making it the biggest draw for contract research organisations (CROs) to want to establish their businesses. As many leading drugs lose patent protection in the EU during the forecast period; companies will seek to refill their pipeline requirements at lower cost and greater efficiencies. This will act to drive growth in the EU5’s drug discovery outsourcing market over the forecast period.

The study includes trends and revenue forecasts to 2024 for the leading national markets. It analyses the US, Japan, Germany, France, the UK, Spain, Italy (EU5), Brazil, Russia, India, China (BRIC nations), and South Korea. Also, the work shows interviews with KOLs and other experts from the industry.

Drug Discovery Outsourcing: World Market Forecast 2014-2024 & Future Prospects for Leading Companies adds to the range of analytical reports on industries and markets in healthcare.