Drug Discovery Services Market

The drug discovery services market size is expected to increase from US$ 25.51 billion in 2024 to US$ 64.89 billion by 2031, with a projected CAGR of 14.3% from 2025 to 2031.

Market Insights and Analyst View:Drug discovery refers to the process of identifying or creating new medications aimed at treating diseases and enhancing human health. This process encompasses the identification of potential drug candidates through various stages, including synthesis, laboratory testing, animal model evaluation, and human trials. Providers of drug discovery services offer specialized knowledge and resources to facilitate the drug discovery process, which may include medicinal chemistry, computational modeling, high-throughput screening, and preclinical testing services. These services are typically offered by contract research organizations (CROs) or academic research institutions. Pharmaceutical companies and biotechnology firms utilize these services to expedite drug discovery processes while maintaining efficiency.

Growth Drivers and Challenges:The drug discovery services market is witnessing substantial growth driven by the increasing demand for innovative therapies across various therapeutic areas. The drug discovery process is intricate and lengthy, with its success relying on comprehensive research into potential drug candidates, along with their testing and validation. Consequently, pharmaceutical companies and research institutions are increasingly depending on drug discovery service providers to bolster their drug development initiatives. These providers offer essential services such as target identification and validation, lead optimization, preclinical studies, and pharmacokinetic and toxicology testing. Additionally, biotechnology and pharmaceutical companies are striving to create targeted treatments that cater to the specific genetic and molecular profiles of individual patients, promoting a more personalized healthcare approach. This growing emphasis on precision medicine and personalized therapies further drives the demand for drug discovery services.

Rising R&D investments from pharmaceutical companies, coupled with the availability of advanced technologies like high-throughput screening, computational modeling, and artificial intelligence, are also advantageous for the drug discovery services market. These technologies facilitate more efficient and effective drug discovery processes, resulting in a higher success rate for new drug introductions. The process of discovering and developing new drugs is costly, often necessitating significant investments in research, development, and clinical trials. According to a study by Genetic Engineering & Biotechnology, the average cost of developing new medicines among the top 20 global biopharmaceuticals rose by 15% ($298 million) to nearly $2.3 billion last year.

The high failure rate of drug candidates in the later phases of clinical trials further escalates the overall cost of drug development. As a result, pharmaceutical and biotechnology companies are increasingly seeking cost-effective drug discovery services, prompting service providers to offer competitive pricing while upholding high-quality standards. The substantial cost of drug molecules also affects the affordability of new therapies for patients, particularly in the context of rare diseases or niche therapeutic areas, presenting a significant challenge for both drug developers and healthcare systems in ensuring access to innovative treatments.

Strategic Insights

Report Segmentation and Scope:The drug discovery services market is categorized based on process, type, molecule type, therapeutic area, and end user. In terms of process, the market is divided into target selection and validation, hit to lead identification, and others (such as assay development and screening). By type, the drug discovery services market is segmented into biology services, medicinal chemistry, drug metabolism, and pharmacokinetics. Regarding molecule type, the market is classified into biologics and small molecules. Based on therapeutic areas, the market is segmented into cardiovascular diseases, oncology, neurology, diabetes, respiratory diseases, and others. By end user, the market is divided into pharmaceutical and biotechnology companies, academic institutions, and others. Geographically, the drug discovery services market is segmented into North America (US, Canada, and Mexico), Europe (UK, Germany, France, Italy, Spain, and Rest of Europe), Asia Pacific (China, Japan, India, South Korea, Australia, and Rest of Asia Pacific), Middle East & Africa (UAE, Saudi Arabia, South Africa, and Rest of Middle East & Africa), and South & Central America (Brazil, Argentina, and Rest of South & Central America).

Segmental Analysis:The small molecules segment accounted for a larger revenue share of the drug discovery services market, based on molecule type. The growth of the small molecules market is attributed to their simplicity in study, well-defined characteristics, and ease of characterization.

In 2022, the medicinal chemistry segment held the largest share of the drug discovery services market by type. Medicinal chemistry is extensively utilized in various aspects of drug discovery, from candidate delivery to preclinical studies.

In terms of therapeutic area, the oncology segment led the drug discovery services market in 2022. The growth of this segment is linked to the increasing global efforts in cancer-related drug discovery. The oncology market is expanding due to the rising incidence of various cancers among the general population. The International Agency for Research on Cancer estimated approximately 10 million cancer-related deaths and 19.3 million new cancer cases in 2020. The global number of new cancer cases is projected to rise by 47% from 2020 to 2040, leading to an estimated 28.4 million new cancer cases worldwide by 2040.

Drug Discovery Services Market Report Scope

Regional Analysis:Geographically, the drug discovery services market is primarily segmented into North America, Europe, Asia Pacific, the Middle East & Africa, and South & Central America. North America is the largest contributor to the growth of the global market, driven by investments from drug development companies, substantial grants from the US government, a strong presence of major drug development firms, a well-established healthcare infrastructure, and an increase in chronic disease incidences.

The American Cancer Society's "Cancer Facts & Figures 2022" estimated around 1,918,030 new cancer cases and 609,360 cancer-related deaths in the US by the end of 2022. Given the high cancer rates in this region, research activities aimed at innovating cancer drugs are expected to thrive in the US in the coming years. In September 2022, CytoReason and Pfizer entered into a multi-year collaboration, allowing Pfizer to utilize CytoReason's artificial intelligence technology for drug development. The integration of AI technology in drug discovery by major US companies is anticipated to drive the growth of the drug discovery services market.

Asia Pacific is projected to exhibit the highest CAGR in the drug discovery services market from 2022 to 2030. The growth in this region is attributed to increasing investments in research and development activities in countries like China, India, Japan, and South Korea, which are emerging as key hubs for pharmaceuticals and biotechnology. Additionally, the availability of a large pool of skilled researchers and scientists, along with lower operational costs compared to Western countries, makes Asia Pacific an appealing destination for outsourcing drug discovery services. The rising prevalence of chronic diseases and the demand for innovative medications to meet unmet medical needs are further propelling the growth of the drug discovery services market in the region.

Competitive Landscape and Key Companies:Key players in the drug discovery services market include Agilent Technologies, Ubiquigent, Abbott Laboratories Inc., Advinus Therapeutics, Albany Molecular Research Inc., Aurigene, Bayer AG, AstraZeneca PLC, Charles River Laboratories International, Covance, and ChemBridge Corporation. These companies are focused on expanding their service offerings to meet the growing global demand. Their international presence enables them to cater to a broad customer base, thereby enhancing their market share.