Drug Discovery Outsourcing (DDO) Market Analysis North America, Europe, Asia, Rest of World (ROW) - US, Canada, UK, Germany, Japan - Size and Forecast 2024-2028

Drug Discovery Outsourcing (DDO) Market Forecast 2024-2028

The Drug Discovery Outsourcing (DDO) Market size is estimated to grow by USD 1.79 billion at a CAGR of 7.44% between 2023 and 2028. 

In recent years, major pharmaceutical firms have increasingly turned to outsourcing manufacturing activities to contract manufacturers, recognizing that their core strengths lie in innovation and brand building rather than production. By delegating manufacturing responsibilities, companies can redirect internal resources towards core competencies such as research and development (R&D) and marketing. This strategic shift allows sourcing companies to address market challenges more effectively while contract manufacturers handle production and supply. Leading pharmaceutical innovators like Roche, Merck, and Pfizer have scaled down in-house production to intensify R&D efforts and meet the growing demand. This trend towards outsourcing has fueled a surge in orders to contract manufacturers, projecting a significant uptick in revenue and sales volume in the market. 

What will be the Size of the Market During the Forecast Period?

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Segmentation by Product, End-user, and Geography Analysis

In the market, pharmaceutical companies are increasingly turning to Contract Research Organizations (CROs) and external specialized partners to drive innovation and efficiency in various stages of drug development. This market is segmented across a spectrum of therapeutic areas, ranging from oncology and heart disease to genetic disorders, metabolic disorders, and chronic disorders. Outsourcing encompasses critical activities such as medication discovery, preclinical development, and analytical/bioanalytical methods, along with specialized services like target identification & screening and target validation & functional informatics. Particularly, the demand for outsourcing services in Infectious Diseases (ID) drugs and vaccines is on the rise due to emerging pathogens. Biologic drug development, including cell line development and upstream & downstream processes, also sees significant outsourcing involvement, supporting the pipeline of biologic drugs. This strategic collaboration enables pharmaceutical firms to focus on in-house drug development and the exploration of novel medicine therapies while leveraging external expertise to navigate complex challenges and meet the evolving needs of healthcare markets.

Product Analsysis 

The small-molecules segment is estimated to witness significant growth during the forecast period. Small molecules are one of the most common forms of drugs. They are organic compounds that can regulate a person's biological processes. Small molecules are produced by a chemical reaction between organic and non-organic compounds. The size of small molecules is typically less than 900 Daltons. The small size and less complexity make the manufacturing process efficient.

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The small-molecules were the largest and were valued at USD 2.51 billion in 2018. Furthermore, outsourcing small molecule development and manufacturing can be more cost-effective than in-house operations, especially for smaller pharmaceutical companies or those focusing on niche markets. Outsourcing allows these companies to access specialized expertise and infrastructure without the significant upfront investments required for in-house facilities. Outsourcing small molecule development and manufacturing enables pharmaceutical companies to focus their internal resources and expertise on core competencies such as pharmaceutical discovery, preclinical research, clinical development, and commercialization strategies. By outsourcing non-core activities, companies can streamline operations and allocate resources more efficiently. The growing demand for small molecules will positively impact the market with high volumes of sales during the forecast period.

End-user Analysis 

Big pharmaceutical companies often have extensive internal resources dedicated to drug discovery. Outsourcing non-core activities allows these companies to optimize their resources by focusing on areas where they have a competitive advantage, such as clinical development, regulatory affairs, and commercialization. Outsourcing provides large pharmaceutical companies with flexibility in scaling their research efforts up or down according to project needs. By engaging multiple outsourcing partners for different stages of drug discovery, companies can optimize resource allocation and project timelines more effectively. High demand for drug discovery outsourcing from big pharmaceutical companies may positively impact the growth of the market during the forecast period.

SMEs may not have the internal resources or expertise required for all stages of drug discovery. Outsourcing allows SMEs to avoid upfront capital investments in infrastructure, equipment, and personnel, as well as ongoing operational costs. Overall, drug discovery outsourcing offers numerous benefits for SMEs, including access to expertise, cost efficiency, flexibility, risk mitigation, speed to market, and access to innovation. As a result, many SMEs are increasingly turning to outsourcing as a strategic approach to drug discovery, enabling them to compete more effectively in the pharmaceutical industry and bring new therapies to market more efficiently, which in turn will fuel the growth of the market during the forecast period.

Regional Analysis

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North America is estimated to contribute 45% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional market trends and drivers that will shape the market during the forecast period. North America, particularly the United States, boasts a robust healthcare infrastructure with a high concentration of pharmaceutical companies, research institutions, and contract development and manufacturing organizations (CDMOs). This ecosystem fosters collaboration and innovation in drug discovery technologies, leading to increased adoption of outsourcing services. The drug discovery outsourcing (DDO) market in North America is growing steadily due to significant investments in healthcare research and testing in the US.  Increasing healthcare investments is another factor in the high demand for outsourcing drug discovery in the region. It is driving the rise in R&D investments, which is fueling the growth of the market in North America.

In addition, North America has stringent regulatory requirements for drug development and manufacturing, including Good Manufacturing Practice (GMP) guidelines enforced by the Food and Drug Administration (FDA) in the United States. Outsourcing drug discovery to CDMOs with established quality systems and regulatory expertise helps companies ensure compliance with regulatory standards, facilitating drug discovery outsourcing market approval and commercialization. The increasing prevalence of chronic diseases, personalized medicine approaches, and targeted therapies have led to a growing demand for speciality pharmaceuticals in North America. These complex drug products often require specialized formulation, driving the need for outsourcing services to CDMOs with expertise in drug discovery. Such factors are driving the regional market growth during the forecast period. 

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Key Market Players 

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market. The report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:

Aragen Life Sciences Pvt. Ltd. - The company offers drug discovery outsourcing solutions such as a comprehensive suite of services that span the entire drug discovery process from target validation, hit generation, hit identification, lead optimization and IND enabling for pharmaceutical and biotechnology companies.

Aragen Life Sciences Pvt. Ltd., Aurigene Discovery Technologies, Catalent Inc., Charles River Laboratories International Inc., Curia Global Inc., Domainex, Eurofins Scientific SE, Evotec SE, GenScript Biotech Corp., LABORATORY CORPORATION OF AMERICA HOLDINGS, Lonza Group Ltd., Lupin Ltd., Novotech Health Holdings, Oncodesign Services, PerkinElmer Inc, QIAGEN NV, Shanghai Medicilon Inc., Syngene International Ltd., Thermo Fisher Scientific Inc., and WuXi AppTec Co. Ltd.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Market Dynamics and Customer Landscape

The market is propelled by pharmaceutical companies aiming to enhance focus on pharmacology, biotechnology, and novel drug therapies while addressing a spectrum of medical needs such as genetic, metabolic, and chronic disorders. Increasing reliance on Contract Research Organizations (CROs) for preclinical and analytical methods reflects a prevailing trend alongside the expanding pipeline of biologic drugs in oncology, heart disease, and autoimmune disorders. Challenges persist in the seamless integration of external partners, ensuring quality standards, and managing intellectual property rights amidst collaborative efforts in medication discovery and development. Our researchers analyzed the market research and growth data with 2023  as the base year, along with the key market growth analysis, trends, and challenges. A holistic analysis of drivers, trends, and challenges will help companies refine their marketing strategies to gain a competitive advantage. 

Key Drivers

Robust demand for biosimilars is notably driving the market growth. Biosimilars, resembling existing biologics but not identical due to biological variability, expand patient access to treatments, notably vital in chronic conditions like rheumatoid arthritis and cancer. Regulatory agencies, like the EMA and FDA, offer clear approval pathways, ensuring biosimilar safety and efficacy.

Moreover, developing biosimilars demands specialized expertise in protein engineering and clinical testing, often outsourced to CROs for cost-efficiency. Outsourcing facilitates access to expertise, reducing development costs and time. With increasing biosimilar demand, outsourcing will crucially aid companies in delivering safe, effective, and affordable products. This trend is expected to drive market growth during the forecast period. 

Significant Trends

Technological advancements boosting drug discovery outsourcing is an emerging trend shaping the market growth. Technological advancements play a crucial role in boosting drug discovery outsourcing by enhancing efficiency, accelerating timelines, and enabling innovative approaches. High-throughput screening (HTS) technologies enable the rapid screening of large compound libraries to identify potential drug candidates with desired biological activities. Outsourcing partners leverage automated screening platforms, robotics, and advanced assay technologies to conduct HTS campaigns efficiently, allowing pharmaceutical companies to screen thousands or even millions of compounds in a cost-effective manner. 

Moreover, outsourcing partners utilize AI-driven platforms for virtual screening, molecular optimization, and predictive modeling, enabling more efficient and informed drug discovery processes. Outsourcing partners that leverage these advanced technologies can provide valuable services, accelerate drug discovery timelines, and contribute to the development of novel therapeutics for unmet medical needs, which in turn may fuel the growth of the market during the forecast period.

Major Challenges

Lack of integration of information is a significant challenge hindering market growth. One of the significant challenges faced by most vendors in the drug discovery outsourcing market is the lack of integration of information and the lack of transparency in the whole supply chain process. Some medicines, such as specialty injections and vaccines, need fast delivery services to ensure their efficacy. Therefore, companies need a centralized system to track changes in inventory and order shipments as required. Shipments or distribution vehicles can be redirected to distribute drugs in areas where there is a requirement. As drug discovery is a complex process, companies to incorporate available data from all stages of the supply chain to track orders and delivery rates.

However, such planning and organization can eliminate disruptions and delays in the pharmaceutical supply chain, making it effectively responsive to unmet medical needs. Lack of integration of information can lead to loss of time, money, and labor invested in the drug discovery and development processes. Such delays can stall the delivery of end products and create mistrust among investors in these drug-developing firms, which can considerably hamper the growth of the market during the forecast period.

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Key Market Customer Landscape

The market report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.

 Customer Landscape

Segment Overview

The market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028. 

• Product Outlook
  • Small-molecules
  • Biologics
  End-user Outlook
  • Big pharmaceutical companies
  • Small and medium-sized pharmaceutical companies
  • Generic pharmaceutical companies

• Region Outlook
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • Asia
    • China
    • India
  • Rest of World (ROW)
    • Brazil
    • Argentina 
    • Australia 

Market Analyst Overview

The market witnesses dynamic growth, driven by advancements in Artificial Intelligence (AI) aiding drug design and molecular modelling. Biopharmaceutical companies, facing budget constraints, turn to outsourcing for specialized Chemistry and Biology services, bolstering research in genomics and proteomics. Key players like AstraZeneca and Accent Therapeutics collaborate with academic institutions like The University of Nottingham, harnessing expertise in RNA-Modifying Proteins (RMPs) and combating Antimicrobial resistance. Outsourced Drug Development processes encompass diverse therapeutic areas, from oncology to respiratory diseases like Chronic Obstructive Pulmonary Disease (COPD) and asthma.

Additionally, emerging technologies such as Novel Drug Delivery and Immunotherapies offer promising avenues, while Clinical Trials ensure the efficacy of specialty medicines addressing Neurological and Cardiovascular Disorders. Amidst global challenges like antimicrobial resistance and the burden of chronic diseases, Drug Discovery Outsourcing emerges as a vital strategy for delivering effective treatments to patients worldwide. Labcorp Drug Development plays a crucial role in offering Nonclinical Testing Services to advance drug compounds toward market readiness.

Market Scope
Report Coverage	Details
Page number	166
Base year	2023
Historic period	2018-2022
Forecast period	2024-2028
Growth momentum & CAGR	Accelerate at a CAGR of 7.44%
Market growth 2024-2028	USD 1.79 billion
Market structure	Fragmented
YoY growth 2023-2024(%)	7.3
Regional analysis	North America, Europe, Asia, and Rest of World (ROW)
Performing market contribution	North America at 45%
Key countries	US, Canada, UK, Germany, and Japan
Competitive landscape	Leading Comapnies, Market Positioning of Comapnies, Competitive Strategies, and Industry Risks
Key companies profiled	Aragen Life Sciences Pvt. Ltd., Aurigene Discovery Technologies, Catalent Inc., Charles River Laboratories International Inc., Curia Global Inc., Domainex, Eurofins Scientific SE, Evotec SE, GenScript Biotech Corp., LABORATORY CORPORATION OF AMERICA HOLDINGS, Lonza Group Ltd., Lupin Ltd., Novotech Health Holdings, Oncodesign Services, PerkinElmer Inc, QIAGEN NV, Shanghai Medicilon Inc., Syngene International Ltd., Thermo Fisher Scientific Inc., and WuXi AppTec Co. Ltd.
Market dynamics	Parent market analysis, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the between 2024 and 2028
• Precise estimation of the size and its contribution of the market in focus to the parent market
• Detailed analysis of customer landscape covering Diver of price sensitivity, Adoption of the lifecycle, and key purchase criteria 
• Companies landscape comparing criticality of inputs and factors of differentiation
• Exclusive Matrix on companies position and classification
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market industry across North America, Europe, Asia, and Rest of World (ROW)
• Thorough analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the growth of companies

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