Outsourced Drug Discovery Market is Up 17% Per Our Eighth Edition Study of the CRO Market

Outsourced Drug Discovery Market is Up 17%  Per Our Eighth Edition Study of the CRO Market

Many pharmaceutical companies reduced their workforces in recent years, as well as taking other money-saving measures.  This was done to help stabilize profits in the aftermath of patent losses.   Much of the saved revenue was allocated to R&D.  That became an issue, because patents on a significant number of blockbuster drugs have expired. Between 2012 and 2016, branded pharmaceuticals with an estimated $117.2 billion in U.S. sales went off patent.  That means there is a gap between product pipeline need and internal resources to handle research activities. 

How do you fill that gap? With outsourcing. 

So there’s been an increased market.  And more than just the pipeline gap, there’s also expertise with outsourcers, technologies that aren’t in-house at some smaller firms.  The market for outsourced drug discovery services is robust with an optimistic outlook going forward. The global market is estimated to reach $27.8 billion in 2018 up 17% from $24.2 billion in 2017.

The rate of new drug development has stagnated despite large annual allocations in R&D spending.  And drugs that do make it to market lack the market size/revenue of their predecessors, which portend the end of the blockbuster era.   In response, outsourcing of discovery activities has increased.  That's a trend that we have  kept track of since 2002.  We just released our 8th Edition of Outsourcing in Drug Discovery Market.

 We sourced this estimate from a detailed review of company publications and investor calls, as well as interviews with industry.  Kalorama’s report profiles scores of companies.  The report can be found at the firm’s website https://www.kaloramainformation.com/Outsourcing-Drug-Discovery-Contract-Research-Organization-CRO-Edition-11506775/.

The drug discovery process consists of iterative cycles between chemistry and biology. Drug discovery in pharmaceutical research typically combines target-based and chemistry-based technologies to enable the discovery of new compounds. Drug discovery requires technical expertise in the areas of molecular biology, ultra-high throughput screening, molecular and behavioral pharmacology, and combinatorial, medicinal and analytical chemistry. The process can be organized into four stages: target identification, target validation, high speed screening, and lead optimization.

The Tuffs Center for the Study of Drug Development estimates that on average the industry spends an average of $2.6 billion in research and development to bring a product to market. This number incorporates the cost of failures. Of the thousands and sometimes millions of compounds that may be screened and assessed early in the R&D process, only a few will ultimately receive approval.

To speed the process and cut costs, it is necessary to improve target identification and validation, and to be able to predict or determine absorption, distribution, metabolism, excretion and toxicity (ADME/Tox) profiles earlier during discovery process. To achieve these goals, drug research has turned to new areas in science to develop better in vitro, in vivo, and in silico methods and models.

A critical bottleneck in the drug discovery process is the hit-to-candidate stage. Scientists interviewed for this report generally agree that the number of potential targets has increased sharply over the last decade, but information about those targets, i.e., sufficient understanding of gene and protein function–especially in the context of biological pathways, has not increased at the same rate. To break the bottleneck, anti-targets need to be eliminated earlier, freeing up researchers to concentrate their time and attention on potential targets of interest.
Another bottleneck is the characterization of absorption, distribution, metabolism and excretion (ADME) properties of new molecular entities (NMEs) in the pipeline. With the number of identified drug targets increasing, candidate compounds with significant ADME and toxicity profiles need to be determined earlier in the process of drug discovery and development. Failure to determine ADME characteristics and physiochemical properties can cause a compound to fail during later drug development stages or in clinical trials.