Drug Discovery Services Market Growth and Opportunities Explained

The global drug discovery service market is set to grow quickly, and there are three major drivers behind this.

Increased investments in outsourced research and development, rapid technology advances, and the continually rising demand for new therapeutics are driving market expansion and attracting increasing investments.

Understanding Drug Discovery Services

Drug discovery is a sophisticated process that involves the identification of compounds that can treat diseases.

Throughout history, various medicines have been discovered using the trial-and-error method or by separating and testing the active components of natural medicines. These methods are no longer applied since technological progress has influenced the process and made it much more precise and efficient.

Here are some of the key specifics behind drug discovery services:

1. Currently, oncology is the number one therapeutic area for new medicine discovery, mainly due to the rising global cancer burden. To more easily understand the trend, the American Cancer Society estimates that in the United States alone, the number of new cancer cases in 2025 will exceed 2 million.
2. Chemistry services play a major role in the drug discovery services market since they assist in the development of new drugs using advanced techniques, including:
3. Combinatorial chemistry (accelerated testing of many chemical combinations)
4. Structure-based drug design (which refers to a way of creating new medicines by looking at the shape and structure of the “target” inside a body that the drug needs to interact with; to achieve this, scientists apply 3D models of the targets to develop and improve medicines to ensure a perfect fit, like fitting a key into a lock.)
5. Contract research organizations are specialized firms carrying out outsourced research and development for pharmaceutical companies. They are more flexible and possess capacities and in-house R&D that smaller pharmaceutical companies often lack.

Drug Discovery Services Market Value

In 2024, the drug discovery services market was valued at US$21 billion. Within a decade, this is poised to increase by almost four times, reaching US$79 billion and showing a CAGR of 14.13%, according to Precedence Research.

The table below shows the estimated growth of the drug discovery service market (USD billion):

What is behind such spectacular estimates? There are several drivers that are expected to influence market evolution.

Growth Drivers of Drug Discovery Services Market

1. Increasing investments in research and development

To create new medicines, pharmaceutical and biopharmaceutical businesses are spending much more on research and development, with this being oriented to outsourcing.

The emphasis on orphan drugs and rare diseases is speeding up this investment even more quickly, increasing the need for clinical trial and laboratory testing outsourcing services.

2. An increasing number of chronic diseases

Another key driver of market development is the growing number of chronic illnesses, including diabetes, cardiovascular disease (CVD), respiratory disorders, and some forms of cancer.

In 2020, CVD alone led to 19 million fatalities, which represented around 32% of all deaths in the world, with 523 million people being diagnosed with some form of CVD.

According to estimates, the global cost of chronic diseases will reach $47 trillion by 2030.

Furthermore, the need for new medications is growing as the world's population ages, with the average population age increasing as a result of longer lifespans and fewer births.

For instance, in 1960, the average age in the U.S. was 29.5 years, while in 2021 it increased to 38.6 years.

3. Technological advances

Artificial Intelligence (AI), high-throughput screening, computational modeling, and biologics development are all modern technologies that can improve the efficiency and effectiveness of drug discovery services, allowing novel medicines to be introduced more quickly.

What about the role of AI in drug discovery?

Machine learning (ML) and AI can improve productivity, reduce costs, and accelerate the discovery of new drugs.

1. Data analysis and prediction

AI-driven algorithms can evaluate huge datasets, making it possible to predict drug interactions and optimize compound screening.

2. High-throughput screening (HTS)

Computational models driven by AI have the ability to evaluate thousands of compounds extremely rapidly thus finding promising drug candidates more quickly compared to conventional techniques.

3. Personalized medicine development

Because AI can be used to customize medication for each patient according to their genetic profile, it can considerably improve the level of treatment efficiency and reduce negative effects.

4. Automation in drug testing

By spotting certain patterns and improving drug testing procedures, ML models can reduce the rate of failure and, as a result, show better precision.

Market Growth Opportunities

In the earlier years, drug and medical device companies undertook the initial stages of research and addressed the accompanying challenges in-house and only hired partners during the final stages or for certain basic tasks.

The situation has changed over recent years, with companies such as Pfizer and Roche deciding to collaborate with specialized laboratories to outsource even the first stages of research, which allows them to save both time and money.

Bigger players look towards outsourcing because the development of new drugs requires a great deal of time and investment to undertake high-tech tests such as advanced chemical analysis, genetic testing, and safety checks.

This is why we are likely to witness a rapid expansion of contract research organizations that provide advanced resources and expertise to pharma and biopharma companies, allowing them to:

1. Save on upfront costs for machines and training
2. Concentrate on developing new drugs with their own teams
3. Accelerate development for diseases that require treatments.

However, not everything is positive for this market. Research reveals that as a result of global economic uncertainty and reductions in financing for pharmaceutical R&D, drug discovery services are vulnerable.

Final word

Pharmaceutical and biotechnology firms are expected to lead the way in healthcare modernization, delivering more breakthroughs, and opening the door to pioneering therapies and improved outcomes for patients.

Despite the challenges, the market is still predicted to show substantial growth, driven by a rise in chronic diseases, rising R&D investments, and AI breakthroughs.