Growth Opportunities in Drug Discovery and Early Development Outsourcing Services

Growth Opportunities in Drug Discovery and Early Development Outsourcing Services

M&As, Partnerships, and the Shift Toward an End-to-end CRDMO Model will Boost Sector Expansion

RELEASE DATE
20-Feb-2024
REGION
North America
Research Code: PFA5-01-00-00-00
SKU: HC_2024_592
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Description

The global pharmaceutical research and development (R&D) pipeline accounts for more than 21,000 molecules, as of April 2023, indicating a 5.8% hike over 2022, with more than 6,100 molecules in active development. In general, however, the pharma/biopharma industry has stagnated with respect to R&D activity. Overall R&D expenditure totals about $276.81 billion, with slow 2.5% growth between 2023 to 2024. Decline in the year-on-year growth rate is the result of a shift in focus from COVID-19 therapies to more mainstream therapies across oncology, neurology, respiratory, and many more conditions, which is resulting in overall market normalization with respect to growth rates. Furthermore, the industry witnessed a decline in the average return on investment (ROI) for R&D to as low as 1.2%, and the peak sales per asset valued just above $350 million, indicating a need to build more efficient drug development processes with the implementation of newer technologies.

Of total R&D expenditure, the top 10 pharma companies accounted for just 4% to 5% of the pipeline, while the top 25 contributed to less than 10%. In contrast, small-to-mid segment and emerging biopharma players (companies with 1 or 2 molecules in the pipeline) are the major contributors, accounting for more than 16% of the active pipeline. As a result, the demand for outsourcing activities is on the rise globally, with contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs) contributing to the strong industry growth.

Moreover, advancements in multiple emerging biotechnology platforms (e.g., RNA technology, protein degradation [PROTAC], and antibody engineering technologies) coupled with the application of digital health technologies in the form of artificial intelligence (AI) and machine learning are supporting unprecedented innovation, ascertaining increased success of a molecule. This activity is improving the partnership landscape across the global drug discovery and preclinical development industry.

Overall, the sector is witnessing an emergence of specialized lab testing and bioanalytical CROs. With techniques such as next-generation sequencing (NGS), high throughput screening (HTS), and many more crucial to drug development, a steady rise in CRO and central lab partnerships is underway. To add to this, several specialized bioinformatics CROs are emerging and creating greater partnership opportunities. Last, the larger CROs have developed separate lab testing divisions that allow them to focus on specific drug discovery and preclinical development testing services.

Moving forward, CROs/CDMOs will likely focus on targeted scale up of preclinical capabilities through cross-industry partnerships and academic partnerships, ascertaining knowledge transfer to pharma companies through out-licensing opportunities, thereby supporting greater innovation while transitioning from a vendor-ship to partnership model.

Author: Aarti Siddhesh Chitale

Table of Contents

Why is it Increasingly Difficult to Grow?

The Strategic Imperative 8™

The Impact of the Top 3 Strategic Imperatives on the Drug Discovery and Early Development Outsourcing Industry

Growth Opportunities Fuel the Growth Pipeline Engine™

Scope of Analysis

Phases of Drug Discovery and Early Development

Market Segmentation

Key Competitors by Region

Key Competitors by Type of Service

Drug Discovery and Early Development Services

Key Industry Trend Analysis

Digitization of the Drug Development Value Chain

Computer-aided Drug Discovery and Preclinical Research

Growth Metrics

Growth Drivers

Growth Restraints

Drug Discovery and Preclinical Development—Evolving Vendor Ecosystem

Drug Discovery and Preclinical Development—Evolving Vendor Ecosystem (continued)

Drug Discovery and Preclinical Development—Evolving Vendor Ecosystem (continued)

Drug Discovery and Preclinical Development—Evolving Vendor Ecosystem (continued)

CRDMOs—The New Go-to Partners for Pharma Innovation

Academia—Bridging the Research Gap in Pharma Innovation

Evolution of Academic Research

CROs Paving Way for Efficient Technology Transfer

Investment Trends

Early-stage CRO/CDMO Service Collaboration—Nonclinical

Early-stage CRO/CDMO Service Collaboration—Nonclinical (continued)

Early-stage CRO/CDMO Service Collaboration—Nonclinical (continued)

Early-stage CRO/CDMO Service Collaboration—Nonclinical (continued)

Early-stage CRO/CDMO Service Collaboration—Nonclinical (continued)

Early-stage CRO/CDMO Service Collaboration—Nonclinical (continued)

Expanding Non-clinical Expertise through Industry Acquisitions

Expanding Non-clinical Expertise through Industry Acquisitions (continued)

Expanding Non-clinical Expertise through Industry Acquisitions (continued)

Scale Up through Funding and In-house Investments

Scale Up through Funding and In-house Investments (continued)

Scale Up through Funding and In-house Investments (continued)

Scale Up through Funding and In-house Investments (continued)

Pharma R&D Expenditure

Pharmaceutical R&D Landscape

Pharmaceutical R&D Landscape (continued)

R&D Mapping by Therapy Area and Stakeholder Type

R&D Pipeline Assessment by Therapy Area and Stakeholder Type

R&D Pipeline Assessment by Therapy Area and Stakeholder Type (continued)

Nuances of Drug Discovery and Preclinical Development

Revenue Forecast Assumptions and Methodology

Revenue Forecast

Revenue Forecast by Phase of Development

Revenue Forecast Analysis

Revenue Forecast Analysis (continued)

Revenue Forecast by Region

Percent Revenue Share by Region

Revenue Forecast Analysis by Region

Revenue Forecast Analysis by Region (continued)

Competitive Environment

Revenue Share by Type of Service Vendor

Revenue Share Analysis—CRO

Revenue Share Analysis—CDMO

Competitor Landscape by Type of Non-clinical Service

Competitor Landscape—CRDMOs

Competitor Landscape—CROs

Competitor Landscape—CDMOs

Competitor Assessment

Competitor Assessment (continued)

Growth Opportunity 1: Next Generation Sequencing (NGS) and Bioinformatics Capabilities

Growth Opportunity 1: Next Generation Sequencing (NGS) and Bioinformatics Capabilities (continued)

Growth Opportunity 2: Regulatory Consulting and IND-enabling Studies

Growth Opportunity 2: Regulatory Consulting and IND-enabling Studies (continued)

Growth Opportunity 3: De Novo Drug Design and Disease Modeling with Generative AI

Growth Opportunity 3: De Novo Drug Design and Disease Modeling with Generative AI (continued)

Your Next Steps

Why Frost, Why Now?

List of Exhibits

Legal Disclaimer

The global pharmaceutical research and development (R&D) pipeline accounts for more than 21,000 molecules, as of April 2023, indicating a 5.8% hike over 2022, with more than 6,100 molecules in active development. In general, however, the pharma/biopharma industry has stagnated with respect to R&D activity. Overall R&D expenditure totals about $276.81 billion, with slow 2.5% growth between 2023 to 2024. Decline in the year-on-year growth rate is the result of a shift in focus from COVID-19 therapies to more mainstream therapies across oncology, neurology, respiratory, and many more conditions, which is resulting in overall market normalization with respect to growth rates. Furthermore, the industry witnessed a decline in the average return on investment (ROI) for R&D to as low as 1.2%, and the peak sales per asset valued just above $350 million, indicating a need to build more efficient drug development processes with the implementation of newer technologies. Of total R&D expenditure, the top 10 pharma companies accounted for just 4% to 5% of the pipeline, while the top 25 contributed to less than 10%. In contrast, small-to-mid segment and emerging biopharma players (companies with 1 or 2 molecules in the pipeline) are the major contributors, accounting for more than 16% of the active pipeline. As a result, the demand for outsourcing activities is on the rise globally, with contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs) contributing to the strong industry growth. Moreover, advancements in multiple emerging biotechnology platforms (e.g., RNA technology, protein degradation [PROTAC], and antibody engineering technologies) coupled with the application of digital health technologies in the form of artificial intelligence (AI) and machine learning are supporting unprecedented innovation, ascertaining increased success of a molecule. This activity is improving the partnership landscape across the global drug discovery and preclinical development industry. Overall, the sector is witnessing an emergence of specialized lab testing and bioanalytical CROs. With techniques such as next-generation sequencing (NGS), high throughput screening (HTS), and many more crucial to drug development, a steady rise in CRO and central lab partnerships is underway. To add to this, several specialized bioinformatics CROs are emerging and creating greater partnership opportunities. Last, the larger CROs have developed separate lab testing divisions that allow them to focus on specific drug discovery and preclinical development testing services. Moving forward, CROs/CDMOs will likely focus on targeted scale up of preclinical capabilities through cross-industry partnerships and academic partnerships, ascertaining knowledge transfer to pharma companies through out-licensing opportunities, thereby supporting greater innovation while transitioning from a vendor-ship to partnership model. Author: Aarti Siddhesh Chitale
More Information
Author Aarti Siddhesh Chitale
Industries Healthcare
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Is Prebook No
Podcast No
WIP Number PFA5-01-00-00-00