PUBLISHER: Grand View Research | PRODUCT CODE: 1301159
PUBLISHER: Grand View Research | PRODUCT CODE: 1301159
The global biotechnology and pharmaceutical services outsourcing market size is expected to reach USD 107.96 billion by 2030, according to a new report by Grand View Research, Inc. The market is expected to grow at a CAGR of 5.3% from 2023 to 2030. The COVID-19 pandemic has significantly impacted biotechnology and pharmaceutical third-party service providers as well as clinical trials, resulting in trial delays, suspensions, and terminations. The recovery from the pandemic has led to the increasing adoption of Machine Learning (ML)-based platforms, Artificial Intelligence (AI), automation in drug manufacturing, and innovative trial designs that are projected to transform the CRO and CMO landscape in the coming years.
With rising competitiveness, companies are concentrating on their core capabilities to maximize resources and foster innovation. Focus on their key competencies, such as the development and discovery of new medicines, by outsourcing non-core functions. As a result, several pharmaceutical companies collaborate with various outsourcing service providers for new drug development. For instance, in January 2022, HaemaLogiX, a developer of monoclonal antibodies entered into a partnership with Lonza to manufacture a myeloma drug candidate, KappaMab monoclonal antibody. Biopharmaceutical and pharmaceutical investments in novel and innovative therapies, for instance, regenerative medicine, are driving the R&D activity together with drug development services.
The high demand for biologics along with small molecules has led to the expansion of service portfolios of Contract Manufacturing Organizations (CMOs)/Contract Research Organizations (CROs) for biotechnology and pharmaceutical production. Small pharma/biotech companies are facing challenges while performing in-house development, manufacturing, regulatory affairs, product maintenance, product design, and development, product testing and validation, and training and education, such as a lack of substantial expertise and expensive capability. This, in turn, has created lucrative opportunities for the growth of CMOs and CROs. Contract services are growing and becoming strategic, targeted, and planned.
These factors are expected to play a pivotal role in enhancing the share of CMOs/CROs in the overall market. Growing pricing pressure, regulatory challenges, and patent expiration have led to shrinking margins in the biotech and pharmaceutical industry. Contract services are considered a "strategic competitive weapon" among companies, as these services help overcome these issues. These services offer cost savings to their clients as choosing sustainable suppliers could lead to reduced costs in the long run. They also help save time utilized in the operations and management of a production and research facility. Contract research and manufacturing allow low-cost product development and the manufacturing cost of a product.
Furthermore, outsourcing services assist in overcoming trade barriers and facilitate the entry of firms into the foreign market. Owing to these advantages, several firms choose to outsource services rather than invest capital in production equipment and hiring skilled labor. Furthermore, several key entities in the market are undertaking various strategic initiatives, such as partnerships, service launches, mergers, and acquisitions, to expand their services in the market. For instance, in April 2022, LabCorp, the parent company of Covance, collaborated with a developer of cell and gene therapy technologies, Xcell Biosciences, to expand its research capabilities in cell and gene therapies. Under this agreement, Labcorp and Xcellbio would collaborate on projects aimed at improving the efficacy & safety of cell and gene therapies.