Drug Discovery Services Market Size, Share, Industry, Forecast and outlook (2024-2031)

Global Drug Discovery Services Market Segmented By Process type (Profiling & lead optimization, Screening, Assay development, Cell engineering), By Service Type (Computational Chemistry, Medical chemistry, ADME &DMPK, Biochemistry), By application type (Oncology, Neurology, Metabolic & Inflammatory Disease, Immuno-Oncology), and By Region (North America, Latin America, Europe, Asia Pacific, Middle East, and Africa) – Share, Size, Outlook, and Opportunity Analysis, 2024-2031

Drug Discovery Services Market Size

The Global Drug Discovery Services Market reached US$ 15.58 billion in 2023 and is expected to reach US$ 46.52 billion by 2031, growing at a CAGR of 14.8% during the forecast period 2024-2031.

Outsourcing of drug discovery services, adoption of advanced technologies, focus on personalized medicine, and integration of artificial intelligence (AI) are some of the recent trends in this market.

For instance, rising prevalence of chronic disease, technology improvements, a focus on personalized treatment, and rising R&D spending are all driving forces in the global market for drug discovery services. High-throughput screening, genomics, proteomics, and bioinformatics advancements have completely changed the way drugs are discovered, allowing for quicker and more effective identification and screening of new therapeutic candidates.

Market Summary

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Market Dynamics

The Rising Prevalence of Chronic Diseases will Drive the Global Drug Discovery Services Market Growth

The rising prevalence of chronic diseases such as cancer, cardiovascular disease, and neurological problems is driving the need for new treatments. The significance of drug discovery services in identifying novel therapeutic targets and developing effective treatments for various disorders is critical.

For instance, according to World Health Organization (WHO) 2022 report, noncommunicable diseases (NCDs), often known as chronic diseases, are accountable for 41 million deaths per year, or 74% of all fatalities worldwide. 17 million of these fatalities occur before the age of 70, with 86% occurring in low- and middle-income nations. Seventy-seven percent of NCD fatalities occur in low- and middle-income nations. 

Cardiovascular illnesses (17.9 million) and cancer (9.3 million) are the primary causes of NCD fatalities, followed by chronic respiratory diseases (4.1 million) and diabetes (2.0 million, including deaths from kidney disease linked to diabetes). Hence, owing to the above factors, the global drug discovery services market is expected to drive over the forecast period.

The Increasing R&D Expenditure will Drive the Global Drug Discovery Services Market Growth

The demand for drug discovery services is being driven by Pharmaceutical & Biotechnology companiesceutical companies' increasing expenditure on R&D projects. Many prominent pharmaceutical & biotechnology companies invested a lot of money in drug development initiatives, which expanded the market for drug discovery services, thereby driving the global drug discovery services market over the forecast period.

For instance, in May 2023, NVentures, the venture capital arm of NVIDIA, announced an investment in CHARM Therapeutics, a 3D deep-learning biotechnology business that discovers and develops transformative medicines with the use of cutting-edge computation and machine learning technology for drug discovery processes. A significant accomplishment for CHARM, the funding enables the business to carry out its research and development initiatives in the field of innovative oncology medications. 

The High Cost of Drug Discovery Process is Hampering the Growth of the Global Drug Discovery Services Market

The cost of developing a novel medicine from discovery to market approval presents a problem for smaller pharmaceutical & biotechnology companies and startups, limiting their access to drug development services. Drug development can cost hundreds of millions to billions of dollars, with a single drug company's average cost per medicine produced and approved clocking in at $2.3 billion. 

For instnace, for smaller pharmaceutical & biotechnology companies and startups, the high cost of drug discovery and development is a hurdle. It entails significant costs for regulatory approval, testing, clinical trials, and research. High failure rates and protracted development times add to the financial burden. Complex regulatory compliance increases complexity and costs, especially for businesses with limited resources. 

Market Segmentation Analysis

The global drug discovery services market is segmented based on process type, service type, application type, end user, and region.

The Computational Chemistry Segment is Expected to Hold a Dominant Position in the Global Drug Discovery Services Market Over the Forecast Period

The computational chemistry segment is projected to dominate the global drug discovery services market accounting market share of about 31.7%, owing to the enhanced efficiency and cost savings, improved accuracy and predictability, industry collaboration and partnerships, and integration of artificial intelligence (ai) and machine learning. 

Computational chemistry is essential in drug discovery services, utilizing methods like virtual screening, QSAR, and molecular docking to analyze and predict chemical compound behavior. Techniques such as molecular modeling, virtual screening, molecular docking, and QSAR modeling enable the prediction of drug candidate properties, optimization of structures, and understanding of interactions with biological targets. 

For instance, the partnership between Bayer and Google Cloud in January 2023 is a perfect illustration of how computational chemistry is driving the drug discovery process. Bayer aims to accelerate early drug discovery by integrating machine learning and quantum chemistry computations. This partnership highlights the expanding importance of computational chemistry in identifying prospective drug candidates more rapidly and accurately, underscoring its vital role in the pharmaceutical & biotechnology sectors.

Market Geographical Share

North America Holds a Dominant Position in the Global Drug Discovery Services Market.

North America is estimated to hold around 38.6% of the total market share throughout the forecast period, owing to the higher investments in drug discovery R&D, significant firms with established research infrastructure, technical improvements, and the rising prevalence of chronic diseases.

The presence of established market players in the U.S. will drive the drug discovery services market demand over the forecast period due to collaboration and investments in the R&D process for drug discovery. For instance, in January 2022, Charles River Laboratories International and SAMDI Tech formed a partnership to promote SAMDI Tech's label-free high-throughput screening MS platform, combining resources and expertise in drug discovery.

Drug Discovery Services Companies

The major global players in the market include Piramal Pharma Solutions, Biopta, Charles River Laboratories International, Domainex, Evotec AG, Albany Molecular Research Inc., GenScript, Pharmaceutical Product Development, LLC (PPD), WuXi AppTec, and Merck & Co., Inc., among others.

COVID-19 Impact on Market

The global drug discovery services market has been significantly impacted by the COVID-19 pandemic in a positive way. The epidemic has increased government financing for drug development research, as well as pharmaceutical & biotechnology company investment. As a result, demand for drug discovery services has increased, notably in the areas of target identification, lead optimization, and preclinical development.

Furthermore, the pandemic has caused a number of modifications in the way drug research is conducted. For example, a larger emphasis has been placed on the use of artificial intelligence and machine learning in drug discovery. This is because these technologies can help to speed drug discovery while also lowering drug development costs.

Russia-Ukraine Conflict Analysis

The war between Russia and Ukraine has posed considerable obstacles to the global drug discovery services industry. These issues include growing energy prices and supply chain disruptions, research delays caused by lab evacuation or relocation, and an increased risk of cyberattacks on organizations' data and intellectual property. As a result, the market is expected to slow down in the near future. 

However, the market is projected to rebound in the long run as demand for new drugs remains high. Despite its severe consequences, the war has promoted research into diseases prevalent in Ukraine and fostered collaboration among drug discovery companies, potentially leading to novel treatments. Thus, the overall impact of the war on the market is a mix of challenges and opportunities.

Key Developments

• In November 2022, Sanofi established a multi-year strategic research collaboration with Insilico Medicine, a clinical-stage biotechnology company. Sanofi will employ Insilico's AI platform, Pharmaceutical & Biotechnology companies.AI, to accelerate drug development in up to six new targets under the terms of the partnership.
• In April 2023, Daewoong, a pharmaceutical company and Sygnature, a globally integrated drug discovery company, established a research collaboration to identify a novel small molecule to target autoimmune illnesses.
• In May 2023, Google Cloud launched two new AI-powered tools, Target and Lead Identification Suite and Multiomics Suite, with the goal of assisting biotech and Pharmaceutical companies in accelerating drug development and advancing precision medicine.

Why Purchase the Report?

• To visualize the global drug discovery services market segmentation based on the process type, service type, application type, end user and region, as well as understand key commercial assets and players.
• Identify commercial opportunities by analyzing trends and co-development. 
• Excel data sheet with numerous data points of drug discovery services market-level with all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Product mapping available as Excel consisting of key products of all the major players.

The global drug discovery services market report would provide approximately 49 tables, 53 figures, and 195 Pages.

Target Audience 2024

• Manufacturers/ Buyers
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies