Drug Discovery Services Market - By Process (Hit-to-Lead Identification, Lead Optimization), Type (Chemistry Services, Biological) Drug Type (Small-molecule), Therapeutic Area (Oncology), End-user (Pharma/Biotech Companies) & Forecast 2023 - 2032

Drug Discovery Services Market size

Drug Discovery Services Market size accounted for USD 16.3 billion in 2022 and is estimated to grow at 14.1% CAGR between 2023 and 2032. Increasing R&D investments by government as well as by private players for novel drug discovery and development coupled with growing demand for novel therapies. For instance, in 2021, according to the Congressional Budget Office report, in 2019, the pharmaceutical sector spent USD 83 billion in R&D activities for development of novel therapies.
 

Drug discovery services refer to specialized services encompass a range of activities and expertise required to identify, optimize, and develop potential drug candidates for evaluation and clinical testing. These drug discovery services help pharmaceutical and biotechnology companies augment their internal capabilities, access specialized expertise, accelerate the drug discovery process, and mitigate risks associated with developing new therapies.
 

COVID-19 Impact

The COVID-19 pandemic has severely impacted the global economies with all the sectors witnessing a significant slump during 2020. The healthcare sector was one of the most severely impacted sectors during the pandemic owing to tremendous pressure on the healthcare systems to contain the spread of infection. During the initial phase of the pandemic, slight slowdown was observed in some non-COVID-19-related drug discovery and research activities. Several companies were noted to revise their R&D spending for clinical trials in comparison to earlier spending. However, rapid recovery was observed due to the growing urge for the development of vaccine and effective drugs for the treatment of COVID-19.
 

Drug Discovery Services Market Trends

Escalating disease burden has created the demand for effective therapeutics and diagnostic solutions. The emergence of severe infectious disorders including COVID-19 and the Ebola pandemic has resulted in the rising need for R&D across the globe. Therefore, catering to such huge demand for novel drugs and treatment therapies, the companies are compelled to broaden their R&D capabilities with significant investments. Some of the leading pharmaceutical and medical device companies are noted to significantly increase spending on their research activities.
 

Drug Discovery Services Restraint

Stringent regulations governing drug discovery services may significantly hamper the drug discovery services market gains. The drug discovery process is subject to rigorous regulations and guidelines imposed by regulatory authorities to ensure safety, efficacy, and quality of new drugs. Compliance with complex regulatory requirements increases the time and cost involved in drug discovery and development. Furthermore, strict regulations can lead to longer approval timelines, higher development costs, and increased risk of regulatory hurdles. These factors can hamper innovation and investment in drug discovery, particularly for smaller companies with limited resources.
 

Drug Discovery Services Market Analysis

By process, the drug discovery services market is classified into target selection, target validation, hit-to-lead identification, lead optimization and candidate validation. The lead optimization segment accounted for 25.9% of the market share in 2022. Lead optimization is one of the critical processes in drug discovery services that involves refining and optimizing potential drug candidates to improve their efficacy, safety, and pharmacological properties. Furthermore, lead optimization aims to enhance the drug candidate's pharmacokinetic properties, such as absorption, distribution, metabolism, and excretion to enhance the drug bioavailability and therapeutic outcomes. Also, it contributes to reducing potential toxicity and adverse effects, making the drug candidate safer for use in humans.
 

Based on type, the drug discovery services market is segmented into chemistry services and biological services. The chemistry services are expected to register around USD 32.8 billion by 2032. Chemistry services in drug discovery involve the synthesis and analysis of chemical compounds to identify and optimize potential drug candidates. These services provide pharmaceutical and biotechnology companies with expertise in medicinal chemistry, synthesis of novel compounds and structure-activity relationship studies. Also, they enable the design and synthesis of diverse compound libraries for screening and identification of potential drug candidates.
 

By drug type, the drug discovery services market is segmented into small-molecule drugs and large-molecule drugs. The small-molecule drugs segment accounted for significant market revenue in 2022 and is expected to grow at 14.4% CAGR through 2032. Small-molecule drugs are widely used in the pharmaceutical industry owing to their oral bioavailability, diverse chemical structures, and favourable pharmacokinetic properties. Adoption of drug discovery services for small molecule drugs helps to identify and optimize small-molecule drug candidates with desirable properties such as potency, selectivity, and safety. They often have lower manufacturing costs and simple formulation requirements making them cost-effective to produce and distribute.
 

The therapeutic area in drug discovery services market is categorized into diabetes, neurology, oncology, infectious diseases, and other therapeutic areas. Oncology segment accounted for USD 4.3 billion market revenue in 2022. The rising burden of oncology will accelerate the adoption rate of drug discovery for novel cancer therapeutics. Drug discovery services in oncology provide specialized expertise, resources, and technologies to identify and develop innovative drugs targeting cancer. Furthermore, owing to the complexity of cancer and growing demand for targeted therapies, pharmaceutical companies are majorly focusing on drug discovery activities to accelerate drug discovery process and development of new cancer therapies.
 

The end-user in drug discovery services market is divided into pharmaceutical & biotechnology companies, contract research organizations and other end-users. Pharmaceutical & biotechnology companies segment accounted for nearly 69% market share in 2022. Pharmaceutical and biotechnology companies are the major end-users of drug discovery services, as these services enable to access a broader range of chemical libraries and screening platforms. The drug discovery service helps pharmaceutical and biotechnology to increase the chances of identifying potential drug candidates and enhance their product offerings.
 

North America drug discovery services market accounted for over 43.8% revenue share in 2022. The increasing prevalence of chronic disease and rising value for novel drugs is expected to boost the market growth. For instance, in 2020, according to the American Cancer Society, over 1.8 million new cancer cases were reported, and 606,520 people died of cancer in U.S. This has led to increasing demand for drug discovery services and novel therapeutics for oncology treatment. Furthermore, presence of major pharmaceutical and biotechnology companies and contract research organizations along with favorable regulatory environment.
 

Drug Discovery Services Market Share

Major business players operating in the drug discovery services market include:

• Charles River Laboratories International, Inc.
• Thermo Fisher Scientific, Inc.
• Wuxi AppTec
• Eurofins Scientific 

Drug Discovery Services Industry News:

• In January 2023, Charles River Laboratories International, Inc. acquired SAMDI Tech, Inc to significantly accelerate and augment clients discovery efforts by measuring biochemical activities and identifying binding interactions for virtually any small molecule drug target. The acquisition is expected to help the company and its clients with seamless access to the premier, label-free HTS MS platform and create a comprehensive, industry-leading library of drug discovery solutions.
   
• In November 2020, Selvita acquired Fidelta to expand the company’s integrated drug discovery services. This strategy helped the company to consolidate its market position and drive revenue progress.
   

The drug discovery services market research report includes an in-depth coverage of the industry with estimates & forecast in terms of revenue in USD from 2018 to 2032, for the following segments:

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By Process

• Target Selection
• Target Validation
• Hit-to-Lead Identification
• Lead Optimization
• Candidate Validation

 Type

• Chemistry Services
• Biological Services

Drug Type

• Small-molecule Drugs
• Large-molecule Drugs

Therapeutic Area

• Diabetes
• Neurology
• Oncology
• Infectious Diseases
• Other therapeutic areas

End-user

• Pharmaceutical & Biotechnology Companies
• Contract Research Organizations
• Other end-users

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Spain
  • Italy
  • Rest of Europe
• Asia Pacific
  • Japan
  • China
  • India
  • Australia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America
• Middle East & Africa
  • South Africa
  • Saudi Arabia
  • Rest of MEA