The preclinical CRO market is expected to register a CAGR of more than 7.86% during the forecast period.
The onset of the COVID-19 pandemic garnered preclinical studies for pharmaceutical products such as vaccines, drugs, and other medical products. Thus, several laboratories and companies were engaged in conducting clinical trials for effective vaccines and drugs for COVID-19. According to a research article published in NCBI in August 2021, even though the clinical studies for drug development of diseases such as Alzheimer's Disease (AD) were hampered by the pandemic in the early stages, the demand for clinical trials increased for various other diseases along with the COVID-19. Thus, these increasing clinical trials for pharmaceutical products increased and impacted the studied market during the later phases of the pandemic. Additionally, in the current times, the production of pharmaceutical products has increased, with an increase in research and development (R&D). This creates a demand for contract research organizations (CROs) engaged in preclinical services and anticipated to fuel market growth. Hence, owing to the above-mentioned factors, the market witnessed considerable growth during the pandemic and is expected to continue its growth trend over the analysis period.
The studied market growth is largely attributed to the factors such as an increase in increasing research and development (r&d) expenditure worldwide, an increase in the number of drugs in preclinical trials, and high demand for medicines uptake by chronically ill patients during the forecast period.
Outsourcing assists organizations in the pharmaceutical sector to reduce both their operational and manufacturing costs and thereby minimize financial risk. Thus, pharmaceutical companies are increasingly outsourcing R&D activities to private contract research organizations (CROs) as a strategy for conducting research and development activities. For instance, in September 2022, Emyria Limited, a clinical-stage biotechnology company, collaborated with PsychoGenics, a neuroscience preclinical drug discovery and contract research organization (CRO). Under this collaboration, Emyria will use PsychoGenic's drug discovery platform, SmartCube, a next-generation automated testing platform. Such instances are expected to increase the demand for the preclinical services the major market players offer. Hence, it is anticipated to contribute to the market's growth.
Moreover, according to the IFPMA's 2021 report, the annual R&D spending by the international biopharmaceutical industry is 7.3 times higher than that of the aerospace and defense industries, 6.5 times more than the chemicals industry, and 1.5 times more than the software and computer services industry. The source above also mentioned that the global biopharmaceutical industry spent USD 196,000 million in 2021, and it is expected to increase to USD 213,000 million by 2024. Thus, with the increasing R&D in the biopharmaceutical industry for pharmaceutical product development worldwide, the adoption of the CRO services and approach is increasing among the market players. This is expected to garner market growth over the forecast period.
However, a lack of standardization, monitoring issues, and stringent regulatory policies are expected to hamper the market's growth.
The harmful effects of an investigational substance are identified via species-, organ-, and dose-specific preclinical toxicity testing on several biological systems. Most of the preclinical CROs provide toxicology testing solutions that include Investigational New Drug Application (IND)-enabling and New Drug Application (NDA)-enabling toxicology services that meet global regulatory requirements, for both small and large molecules. Thus, with the increasing demand for drug and vaccine development, the demand for toxicology testing is also increasing and is anticipated to create opportunities for the availability of toxicity testing services in the preclinical stage. Hence, driving the segment growth.
Consumers' buying behavior of pharmaceutical products such as medicines, vaccines, and medical devices has increased significantly due to the increased burden of chronic diseases. This is anticipated to persist over the coming years. Therefore, several CROs are focusing on the toxicology testing of cosmetic products. For instance, as per a press release by Altogen Labs in January 2022, the company's preclinical CRO services include a full spectrum of pharmacological toxicity safety assays along with other preclinical services.
In addition, as per Charles River in January 2023, to assess the potential safety and toxicity of a drug candidate before it is put to the test in human clinical trials, preclinical toxicology studies are a crucial step in the drug development process. These studies are crucial in determining a drug candidate's dosage range and can reveal information about possible side effects and adverse responses. Thus, Charles River offers a wide range of preclinical toxicology services. Thus, the availability of such service providers creates a competitive environment and creates opportunities for several new entrants. This is further expected to drive the segment growth over the forecast period.
North America is expected to hold a significant share of the market studied throughout the forecast period. Factors such as increasing R&D and increasing demand for medicines among the target population in the region are predicted to drive market growth.
The pharmaceutical industry in North America is concentrated, and companies are focusing more on outsourcing activities with CROs for drug development. In addition, governments across the region also invest heavily in contract development and manufacturing organization (CDMO) drug substance and drug product manufacturing capacity. This is creating opportunities for preclinical CRO services among end users. For instance, in February 2022, Canadian CRO IonsGatePreclinical Services Inc (IonsGate), a company focused on preclinical research services, and European life sciences company InSilicoTrials partnered to leverage innovative technology like Modeling and Simulation. These two companies will work together to optimize preclinical studies relying on innovation and digitalization, as recommended by FDA and EMA. Such activities by major players are anticipated to fuel the segment growth in the region.
Furthermore, according to the February 2022 update by FDA, access to the safest and cutting-edge pharmaceutical system benefits American consumers, and CDER, a division of the FDA, assures that safe and effective drugs are available to the American people. Thus, effective pharmaceutical product development is increasing in the region. In addition, as per data published by the Government of Canada in June 2022, several organizations in Canada are providing preclinical CRO services that include preclinical programs supporting Investigational New Drug (IND) and New Drug Application (NDA) enabling studies. This creates competition in the market, creating opportunities for emerging new entrants. Thus, the competitiveness in pharmaceutical product development creates opportunities for preclinical testing services and is expected to fuel the overall market growth in the region.
The preclinical CRO market is highly competitive and fragmented in nature, with the presence of various well-known service providers globally. Major market players are competing against each other by expanding their range f solutions and services. There are a few companies that are currently dominating the market. The key players have been involved in various strategic alliances such as acquisitions, collaborations, and the launch of advanced services to secure their position in the global market. These companies include Eurofins Scientific, Charles River Laboratories, WuXi Apptec, Labcorp Drug Development, and SGS SA, among others.
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