Drug Discovery Market Size, Share & Trends Analysis Report By Drug Type (Small Molecule Drugs, Biologic Drugs), By Technology (High Throughput Screening, Pharmacogenomics, Combinatorial Chemistry, Nanotechnology, Others), By End-user (Pharmaceutical Companies, Contract Research Organizations, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global drug discovery market size was valued at USD 70.02 billion in 2023. It is expected to reach USD 141.17 billion by 2032, growing at a CAGR of 9.16% during the forecast period (2024–2032).

The process of exploring new candidate medicines is known as drug discovery, and it occurs in the fields of pharmacology, biotechnology, and medicine. In the past, drugs were discovered by coincidence, as with penicillin, or by identifying the active component in conventional treatments. By screening chemical libraries of created small molecules, natural products, or extracts in whole cells or organisms, a technique known as classical pharmacology was used to find substances that had desired therapeutic effects.

The pharmaceutical and biopharmaceutical sectors have witnessed a sharp rise in R&D efforts. The pharmaceutical, biopharmaceutical, and medical device industries invest much money in phase III and preclinical stages of creating new drugs and technologies. One of the key factors influencing the global drug discovery market is the increase in R&D spending, driven by the need for several preclinical and clinical services during the drug discovery and development process.

Market Dynamics

Global Drug Discovery Market Drivers

The Predominance of Several Chronic Diseases

The primary drivers influencing the growth of the drug discovery industry during the ensuing years are the rising burden of chronic illnesses, rising healthcare costs, and the impending patent expiration of blockbuster medications. According to the World Health Organization 2020, major chronic conditions such as type 2 diabetes, cancer, chronic obstructive pulmonary disease, and cardiovascular diseases (CVD) are expected to account for 60% of all disease burden worldwide and 73% of all fatalities in 2020. Therefore, there is a significant need for newer, safe, and effective molecules, which leads to the discovery of new drugs due to the rise in disease and patients’ knowledge of the need for tailored therapy.

Growing Research and Development Expenditures for the Creation of Novel Drug Molecules

The amount that pharmaceutical businesses spend on R&D has grown over time. Greater money will be invested in drug discovery as a direct result. The quantity of studies is also increasing in situations involving innovative treatments. The FDA reportedly authorized the Active Pharmaceutical Ingredients (APIs) for three peptides, according to a study article in Pharmaceuticals in February 2020. According to a study published in BioPharma Trend 2020, the use of artificial intelligence in the pharmaceutical sector for drug development is advancing quickly. This factor is predicted to increase the substantial expenditure in R&D efforts for identifying novel therapeutic targets leading to market growth.

Boost in Welfare Spending

Another factor driving the drug discovery industry is healthcare expenditures. The pharmaceutical industry plays a significant role in healthcare by providing drugs and vaccines for various health interventions. So the growth of the drug discovery process is significantly influenced by the healthcare spending from business enterprises and government budgets each year. Due to the expansion of insurance coverage, healthcare costs rapidly expand worldwide. Hospitals are in more demand as a result of the growing patient population. The need for innovative treatments has increased due to the extraordinary expansion in healthcare spending and the creation of numerous treatment choices in hospitals and clinics for patients' well-being. Therefore, this element is anticipated to increase the market growth.

Global Drug Discovery Market Restraints

 Financial Constraints

Numerous factors influence the amount of money costs to create a medicine, which ultimately puts a heavy financial strain on the firms engaged in drug discovery and development. The expense of failing medication candidates throughout trial phases is one of the primary causes of high costs. The pharmaceutical industry is under pressure to increase its success rate with limited resources to lower the cost of failure since the return on investment (ROI) is dropping considerably. Large corporations experience long-term losses. Nevertheless, losses have a significant impact on small and medium-sized businesses. As a result, a significant hurdle to the drug discovery industry is the large capital expenditure required for drug development coupled with low-profit margins.

Punitive Government Policies

Pharmaceuticals must often closely abide by the requirements set by regulatory bodies since most drugs are used to treat critically sick people with chronic conditions. Many countries have lengthy clearance processes for pharmaceutical pharmaceuticals because of strict regulatory standards, particularly for cancer-related medications. The regulatory agencies frequently significantly impact how clinical research design is done. Therefore, the drug discovery market is anticipated to see constraints during the forecast period due to the authorizing bodies' strict regulatory standards.

Regional Analysis

North America Owns Maximum Shares

By region, the global drug discovery market is segmented into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.

North America holds the largest market share and is expected to grow at a CAGR of 8.06% during the forecast period. The primary reason behind this massive growth is the existence of the US. When it comes to the amount spent on pharmaceutical R&D, the United States is the global leader. Additionally, it is the biggest market for completed dose formulations and bulk medications. The US market functions under the principles of a free economy, which are intended to enact open trade policies and prohibit anti-competitive behaviour. The US pharmaceutical sector has been at the vanguard of developing new drugs for more than 30 years, and PhRMA member businesses are still at the forefront.

Europe holds the second-largest market share and is estimated to account for USD 32,218 million by 2030, growing at a CAGR of 9.08%. The rising prevalence of chronic diseases like cancer and diabetes is anticipated to boost market expansion in this region. Most market participants are discovered to concentrate on medicine launches and developments. Future growth in the drug discovery market in this region is anticipated due to the rising frequency of targeted ailments and the presence of several foreign businesses. The market is becoming more profitable as chronic diseases are becoming more common.

The existence of several developing and developed economies is the main factor for Asia-Pacific to thrive. The Chinese pharmaceutical market is expanding at a steady rate. The main driver of this expansion is an increase in the population's need for effective medications. On the other side, India's healthcare system has the quickest rate of expansion worldwide. The total healthcare system and the drug discovery industry are expanding due to the rising prevalence of chronic illnesses.

Segmental Analysis

The global drug discovery market is segmented by drug type, technology, end-user, and region.

On The Basis Of Drug Type

By drug type, the global drug discovery market is bifurcated into Small Molecule Drugs and Biologic Drugs.

The Small Molecule Drugs segment dominates the market and is anticipated to grow at a CAGR of 8.98% during the forecast period. The FDA is more likely to classify Small-molecule medications first in class or breakthrough medicines than the other molecules. To combat illnesses, small molecule medications are therefore proven to be crucial. As a result of the growing number of small molecule drugs being approved, the rising demand for R&D from contract organizations, and the increasing use of small molecules in the treatment of chronic diseases, it is anticipated that the market for small molecule drug discovery will experience enormous growth.

On The Basis Of Application

By application, the global drug discovery market is categorized into High Throughput Screening, Pharmacogenomics, Combinatorial Chemistry, Nanotechnology, and Others. 

The High Throughput Screening segment dominates the market and is projected to grow at a CAGR of 8.62% during the forecast period. In the pharmaceutical sector, high-throughput screening techniques are widely employed to swiftly examine many compounds' biological or biochemical activity, often pharmaceuticals. These techniques make use of robots and automation. They speed up target analysis since vast compound libraries can be swiftly and affordably screened. The need for high-throughput screening technology has been stimulated by the rapid increase in financing for research and development and the emergence of significant market players.

Other technologies include Biochips, bioinformatics, genomics, and several supplementary technologies. Recent developments in genomics have paved the way for the creation of genetic and genomic high-throughput systems for use in gene expression and regulatory study, opening the door to the identification of promising new treatments for a range of disorders. A significant portion of the leading pharmaceutical firms' massive investments and the abundance of current clinical studies are additional drivers propelling the market's expansion.

On The Basis Of End-User

Based on end user the market is segmented into pharmaceutical companies, contract research organizations, and research institutes.

The drug discovery market caters to various end users. Pharmaceutical companies, the traditional powerhouses, conduct extensive in-house research and development to bring new drugs to market. contract research organizations (CROs) offer specialized services, acting as an extension of these companies' efforts, providing flexibility and cost-effectiveness. Research institutes, including universities and non-profits, play a vital role in laying the groundwork for future discoveries through their fundamental research on new drug targets. Currently, pharmaceutical companies hold the dominant position in the market due to their vast resources and proven track record, but CROs are seeing a rapid rise as companies seek to optimize costs and efficiency.

Impact of covid-19

COVID-19 has positive and negative market consequences, as carbon emissions have decreased globally due to the lockout. COVID-19's reduction in emissions is a short-term benefit. Still, when industries and enterprises attempt to recoup some of their financial losses in the first quarter of the year, carbon emissions will rise dramatically. COVID-19 had a negative impact on global recycling efforts. Countries, notably the United States, have halted or decreased recycling programs to focus on collecting additional domestic waste or because services have been disrupted by the virus.

Also, with industries slowly returning to normalcy following the COVID-19 outbreak, this shift in workplace health and safety is expected to increase due to mandatory social distancing and continuous personal care through sanitization to eliminate even the tiniest possibility of COVID-19 spread. COVID-19 has impacted various companies' revenues, and if the lockdown is lifted, companies will turn their attention to operations to make up for their losses.

Recent Developments

• July 2022- New findings from the unblinded phase of the HPTN 084 research in women in sub-Saharan Africa showed greater efficacy of injectable cabotegravir long-acting for PrEP over daily, oral TDF/FTC pills, according to ViiV Healthcare, the worldwide specialized HIV firm majority-owned by GSK.
• July 2022- ODM-208, an investigational steroid synthesis inhibitor for the treatment of metastatic castration-resistant prostate cancer, will be developed and commercialized as part of a global collaboration announced by Merck and Orion.
• June 2022- Agilent increased analysis speeds of Genomics Bioinformatics Pipelines using NVIDIA and AWS Technology.
• May 2022- The US FDA has approved MYFEMBREE®, a once-daily treatment for managing moderate to severe pain associated with endometriosis, which Myovant Sciences and Pfizer developed.