Declining R&D Budgets Driving Outsourcing of Drug Discovery Functions

According to Kalorama Information (Kalorama; Rockville, MD, USA), a healthcare market research publisher, an increasing number of pharmaceutical companies are outsourcing core procedures, including clinical trial management, manufacturing, and most recently, drug discovery functions.

In a report titled Outsourcing in Drug Discovery, Kalorama examined revenue estimates and trends in the industry to determine that outsourcing for drug discovery procedures has increased over the past few years. The report found that lower research and development (R&D) budgets, along with advancements in molecular biology technologies, have made it difficult for pharmaceutical companies to undertake drug discovery procedures in-house. This, in turn, created a $9.4 billion market for drug discovery outsourcing in 2011.

“It is a high-cost, risky business because only a fraction of the therapeutic targets selected for study will actually yield products that obtain regulatory approval from the FDA,” said Bruce Carlson, publisher, Kalorama Information. “The average drug can take 10-plus years to progress from the discovery phase to the clinic, with only one compound out of 10,000 evolving into a viable product.”

The report explained R&D budgets have been at a standstill in recent years, with PhRMA (Pharmaceutical Research and Manufacturers Association) members’ spending falling roughly 2% to USD 49.5 billion in 2011. Companies are increasingly outsourcing drug discovery processes to Eastern Europe and Asia, where experienced professionals are offering services at cost-saving rates.

Overall, the global market for outsourced drug discovery services was up 15% from 2011 and is forecasted to increase further.

Kalorama Information is a leading publisher of market research in medical markets, including the biotechnology, diagnostics, medical device, and pharmaceutical industries.

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