The global preclinical CRO market size was valued at USD 5.25 billion in 2022. It is estimated to reach USD 10.40 billion by 2031, growing at a CAGR of 7.9% during the forecast period (2023–2031). The trend toward outsourcing is partly fueled by the fact that biopharmaceutical and life sciences firms can save money on infrastructure costs by contracting them out.
Preclinical contract research organizations (CROs) are companies that offer a range of R&D services to the biotechnology, pharmaceutical, and medical device industries. It offers the expertise, information, and abilities required to get a pharmaceutical or medical device from the design stage to the distribution stage. This voyage entails numerous activities involving researchers, a rehabilitative workforce, legislative and industry contacts, specialists, and many other specialized and inventive individuals.
A preclinical CRO offers various services, like toxicology studies, formulation development, regulatory support, pharmacokinetics, and pharmacodynamics studies. Preclinical CRO applications are widespread in drug discovery, biocompatibility, disease modeling, medical device testing, safety pharmacology, and dosage form selection. It assists in expediting product development, leveraging specialized expertise, enhancing regulatory compliance, optimizing resource management, and providing scalable research solutions.
|Market Size||USD 10.40 billion by 2031|
|Fastest Growing Market||Europe|
|Largest Market||North America|
|Report Coverage||Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends|
The geographical distribution of R&D activities is slowly shifting from developed to emerging nations. Rising R&D expenditure and increased failure rates of R&D activities have caused biopharmaceutical companies to prefer regions such as Asia-Pacific, Latin America, Central and Eastern Europe, and the Middle East to ensure cost savings and quick patient recruitment.
Outsourcing preclinical trials to regions such as Asia-Pacific also provides greater economic benefits to biopharmaceutical companies. Governments such as Singapore and China are allocating funds to promote biomedical research in this region. Besides, as a large number of clinical trials are being conducted in countries of the Asia-Pacific and Latin America regions, preclinical trials are also expected to follow the same trend. This would allow preclinical testing to be conducted near central development centers conducting clinical trials. Such factors drive market growth.
One of the primary drivers for the trend of outsourcing is that biopharmaceutical and life sciences companies do not have to make enormous capital investments for specific operations. Companies can outsource their noncore functions to CROs to focus on core operations, increasing productivity and operational efficiency. Outsourcing of R&D functions to emerging markets like Asia-Pacific, and the Middle East and Africa is also increasing.
There is a notable trend of outsourcing preclinical testing functions to CROs or preclinical service providers in emerging nations to reduce cost and increase focus on core R&D functions. This is especially common among small- and mid-size life science companies that do not have an established R&D facility. These companies outsource preclinical testing activities to small- and mid-size CROs to focus more on the clinical drug development process.
The expansion of the preclinical CRO market is restrained due to issues in managing and monitoring trials and the inability to exert complete control over trials. Sometimes, CROs cannot deliver efficient results as expected by life sciences companies, as they try to maximize profits by cutting costs. This may result in several challenges, such as trial failures and compliance issues.
Furthermore, there is a lack of standardization as not all CROs comply with international regulatory requirements such as Good Laboratory Practice (GLP) standards, which may lead to several quality issues. Therefore, biopharmaceutical and medical device companies generally outsource only lower-end functions of preclinical trials to CROs, whereas high-end tests such as genotoxicity analysis are generally done in-house.
Biopharmaceutical companies outsource their early development R&D functions to CROs to reduce product development time and costs. This trend is expected to continue over the forecast period due to the increasing capabilities of CROs to conduct complex research, which enables life sciences companies to reduce R&D expenditure and focus on their core activities. In addition, the collaboration of biopharmaceutical companies with CROs is expected to positively impact the global preclinical CRO market. For instance, in August 2019, Harbour BioMed, a clinical-stage biopharmaceutical company, partnered with global CRO Pharmaceutical Product Development, LLC to develop therapeutics in the field of oncology and immunology for Harbour BioMed.
Moreover, there has been a significant increase in the R&D budget for early-stage and late-stage drug development processes, which is further expected to contribute to market growth. The rising biopharmaceutical failure rates and the costs they entail have also driven biopharmaceutical and life sciences companies to focus more on the early stage of the drug discovery and development process. This is likely to generate opportunities for growth in the preclinical CRO market.
Based on region, the global preclinical CRO market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.
North America is the most significant global preclinical CRO market shareholder and is anticipated to exhibit a CAGR of 7.5% during the forecast period. Due to the presence of established CROs specializing in early drug discovery, like Charles River Laboratories and LabCorp, North America accounts for the largest share of the global preclinical trials outsourcing market. The United States is the largest market for preclinical trial outsourcing, as many biopharmaceutical companies prefer to outsource their preclinical trials to U.S.-based CROs to reap the benefits of an Investigational New Drug (IND) application cleared by the FDA. Biopharmaceutical companies covet the IND application as it accelerates their drug development process while ensuring that safety protocols in the drug development phases are being followed.
In addition, many life sciences and biopharmaceutical companies, such as Pfizer Inc. and Eli Lilly and Company, are present in the North American region. The presence of these companies in this region is also expected to impede the preclinical trial outsourcing market. Moreover, the increase in complex molecule trials is also encouraging big biopharmaceutical companies to outsource their preclinical services to the U.S.-based CROs.
Europe is estimated to exhibit a CAGR of 7.01% over the forecast period. Europe held the second largest share in the global preclinical trial outsourcing market owing to the presence of reputed biopharmaceutical companies such as F. Hoffmann-La Roche Ltd (Switzerland) and Novartis (Switzerland) in this region. As preclinical testing is generally conducted near central drug development centers, outsourcing preclinical trial services to local CROs present in the region is expected to increase, which is expected to further contribute to the growth of preclinical trial outsourcing in this region. In addition, many CROs specializing in early drug discovery, like Charles River Laboratories and LabCorp, have their centers in European countries like the UK, Germany, and France, expected to contribute to market growth in this region.
In Asia-Pacific, the shifting business model of MNC outsourcing and the surging cost of R&D is expected to increase preclinical outsourcing because of the cost efficiency offered by CROs in countries like India and China. Establishing several CROs across the Asia Pacific region has also strengthened this region's preclinical trial outsourcing market. For instance, Singapore has several CROs to support the growing needs of pharmaceutical and biopharmaceutical companies. Some of these CROs include Covance, Quintiles, and ICON, which manage regional preclinical and clinical trials from Singapore. Besides, significant R&D spending by pharmaceutical companies to boost drug development is also likely to bolster the preclinical trial outsourcing market. For example, according to the India Brand Equity Foundation, the R&D investment by the Indian pharmaceutical company accounted for 8.4% of its sales in 2020.
Latin America holds a minor share in the global preclinical trial outsourcing market. However, the region is expected to demonstrate considerable growth owing to the region's proximity to the U.S. biopharmaceutical companies, which reduces the monitoring cost associated with outsourcing preclinical services. The presence of preclinical CROs, rising investment in R&D research, and increasing regulatory support for preclinical trials are expected to drive the growth of the preclinical outsourcing market in the region.
In the Middle East and Africa, the increasing population and rising efforts by the government to increase access to healthcare are expected to attract global biopharmaceutical and medical companies. According to Global data, the Middle East and Africa region accounts for 11.2% of the total number of clinical trials in 2020, and the number is expected to grow as more biopharmaceutical and medical device companies are outsourcing their R&D services in the region.
The global preclinical CRO market is segmented by service, model type, and end-user.
Based on service, the global market is divided into bioanalysis and DMPK studies, toxicology testing, compound management, chemistry, safety pharmacology, and others.
The toxicology testing segment holds the highest market share and is estimated to grow at a CAGR of 7.7% during the forecast period. Toxicology is one of the key services being outsourced to CROs owing to the enhanced capabilities of CROs to conduct toxicology tests. The increasing attrition rate in preclinical studies stimulates the demand for outsourcing preclinical studies to CROs, which offer end-to-end services, including toxicology testing services. Toxicology testing comprises a major aspect of the IND-enabling studies in the U.S. Along with this, the growing rate of outsourcing of noncore preclinical studies to the CROs and growing capabilities of CROs to provide additional value-added services is expected to propel the expansion of this segment during the forecast period.
Safety pharmacology is also an integral part of IND-enabling studies and is one of the key services outsourced to CRO vendors. CROs' safety pharmacology services include the International Council for Harmonization (ICH) core battery test and supplemental studies. ICH core battery test includes safety pharmacological studies, assessing life-threatening risks of using novel pharmaceutical substances. These studies assess the pharmacodynamic properties of compounds for the cardiovascular, respiratory, and Central Nervous System (CNS) systems to ensure human safety.
Based on the model type, the global market is bifurcated into patient-derived organoid (PDO) models and patient-derived xenograft (PDX) models.
The patient-derived organoid (PDO) models segment dominates the market and is projected to exhibit a CAGR of 7.9% over the forecast period. The patient-derived organoid (PDO) model market is expanding due to the patient's directly derived cells and tissues. The specimens can be cryopreserved, which aids in providing tailored therapy. Because they aid in the earlier detection and prognosis of cancer, they are becoming important in preclinical investigations. They are also being used as a platform that can be used to predict the standard of care efficacy, as well as help in the development of novel drugs. In addition, the patient-derived organoid models show better accuracy and cellular heterogeneity. They can copy the exact condition and also give information about the interactions between cell-cell, cell stroma, microenvironment, and therapeutic responses.
The patient-derived xenograft model market has been analyzed to grow steadily over the forecast period. This is because an increasing number of CROs keep an inventory of immunodeficient mice bearing xenografts from patients on-hand (PDXs). For instance, The Jackson Laboratory has over 450 models of live patient-derived xenograft mice available to them. Moreover, due to the preservation of the original genetic makeup of the tumor cells, this form of analysis permits researchers to correlate laboratory research with human subjects. It has also been discovered that the responses in patient clinical trials match those in these patient-derived xenografts, allowing for a better safety profile and speeding up the approval of new drugs (NDA).
Based on end-users, the global market is segmented into biopharmaceutical companies, government and academic institutes, and medical device companies.
The biopharmaceutical companies segment is the largest revenue contributor to the market and is expected to exhibit a CAGR of 7.8% throughout the forecast period. The segment of biopharmaceutical companies is anticipated to dominate the preclinical trial outsourcing market during the forecast period because of the rising trend of outsourcing end-to-end services, particularly among small- and medium-sized pharmaceutical companies that experience difficulties in the preclinical phase of drug development. In addition, the R&D budget allocated to early-stage development has increased significantly, which is anticipated to boost this segment during the forecast period.
Academic institutes and government bodies account for a significant share of the preclinical trial outsourcing market. Academia and government bodies play a critical role in the preclinical discovery and development phase. Besides an increasing number, there is a growing trend of academic organizations and government bodies outsourcing preclinical services to CROs. In addition, academic institutes are among the major sources of revenue for big CROs like Charles River Laboratories and LabCorp. The growing rate of government and academic-sponsored R&D is expected to spur the growth of the preclinical trial outsourcing market over the forecast period.