Pharmaceutical Analytical Testing Outsourcing Market Research Report by Service (Bioanalytical, Method Development & Validation, Stability Testing), Product (API, Additives, Finished Products), End-User (Biopharmaceuticals, Pharmaceuticals, CRO) - Global Industry Demand Forecast to 2030

Market Overview

The global pharmaceutical analytical testing outsourcing market size in 2021 was $7,594.3 million, and it is expected to advance at a CAGR of 8.5% during 2021–2030, to reach $15,814.6 million by 2030. This is ascribed to the innovations in the pharmaceutical industry; the increased emphasis on safety, regulation, and quality; the rise in the number of end users; and the cost advantages of outsourcing.

Increased R&D expenditure is one of the essential sustainability methods employed by participants in the industry. Not every business has the infrastructure necessary for every kind of analytical testing. Thus, outsourcing these tasks is a suitable alternative, saving both money and time.

Pharmaceuticals are in greater demand now than before the COVID-19 pandemic. In the time of crisis, outsourcing providers of pharmaceutical analytical testing were crucial in addressing the testing demands of pharmaceutical corporations, contract research organizations (CROs), biotechnological companies, and other end users, worldwide.

Market Insights

Although starting a new business requires a significant investment, the number of players working in this field has been steadily rising. However, new entrants are projected to be limited by tight regulatory rules and intense rivalry from current competitors. As a result, the threat of new entrants is mild.

On the basis of service offering, price, domain experience, and prior performance, pharmaceutical players shortlist and choose analytical testing companies. Additionally, payers occasionally anticipate quicker turnaround times in an effort to shorten the time to be available in the market. In such circumstances, additional fees are incurred, increasing service providers' revenue. As a result, buyers’ negotiating power is assessed on a medium level.

Due to the presence of numerous big and small players, the industry is very competitive. For businesses to obtain a competitive edge, they have been involved in various market strategies like mergers and acquisitions and partnerships. Additionally, the businesses are concentrating more on diversifying their service offerings, which enables them to increase their organic revenue streams. Thus, the entry of new participants poses a danger to the incumbent players; hence rivalry is high.

There are no external alternatives for specific analytical tests at this time. The raw ingredients can, however, be internally replaced by equipment or chemicals of a different grade or quality. Additionally, these substitutes are required to receive regulatory authority approval from organizations like the FDA. In some tests, biotechnological procedures, such as quantitative polymerase chain reaction, are utilized to produce results faster, although these tests necessitate supportive infrastructure. Thus, the threat of substituents is estimated to be low for the predicted period.

Chemicals, reagents, and laboratory instruments are examples of raw materials necessary for analytical testing. Laboratories have signed contracts with raw material suppliers for a set length of time. If the quality of the raw material deteriorates during the term of the contract, the payers may terminate the contract. Furthermore, the presence of a large number of suppliers exacerbates the situation for providers. Hence, the bargaining power of suppliers is projected to be low.

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Demand for Bioanalytical Services Has Grown Significantly

The demand for bioanalytical services in the pharmaceutical analytical testing outsourcing market is expected to grow at the highest pace in the coming years. This can be attributed to the changing legislation for in-vitro and in-vivo tests, as well as the high complexities of these tests. The development of biosimilars, combination compounds, and other novel drugs has raised the need for certain types of testing such as electrophoresis, electrochemical and titrimetric assays, and immunoassays.

Furthermore, bioanalytical testing is used to identify the characteristics of medicines and metabolites in biological matrices in a quantitative manner. This has a variety of uses, including drug testing and the evaluation of bioavailability, bioequivalence, pharmacokinetics, and pharmacodynamics, in drug development. Also, the market in this category has grown as a result of more clinical trial registrations and the introduction of new players. Many small-scale companies choose to outsource these services to professionals in the field who have years of expertise in executing, documenting, and adjusting to problems posed during research since they lack high-end analytical instruments.

Pharmaceutical Companies Dominated the Market

Pharmaceutical companies accounted for the largest revenue share, of 48%, in 2021, in the market. Many big and small pharmaceutical enterprises around the world are unable to conduct internal analytical testing. This has prompted pharmaceutical firms to work with CROs to avail analytical testing services. Additionally, outsourcing these services allow pharmaceutical companies to focus on their core competencies while saving time.

Whereas, the biopharmaceutical companies category is projected to record the highest CAGR, of around 9%, during the forecast period. Biopharmaceutical businesses require analytical testing in order to boost output, define biosimilars and biologics, and offer continuous quality assurance. Specialized personnel is needed to conduct assays and create regulatory filings for biopharmaceutical analytical testing. This factor has considerably influenced the need for outsourcing biopharmaceutical analytical services to a qualified team and is thus driving the market.

Regional Insights

Geographically, North America accounted for the largest revenue share, of around 53%, in 2021, in the pharmaceutical analytical testing outsourcing market. This is because the region has dependable, intricate, and sophisticated pharmaceutical manufacturing centers. Moreover, the rapid expansion of pharmaceutical production capacity to meet the region's rising need for high-quality healthcare services is one of the key factors driving the market.

In addition, the regional pharmaceutical outsourcing industry is growing, as a result of the surging government funding in this area. Due to the expanding demand for cutting-edge medications, the pharmaceutical and biotechnology sectors in North America have recently increased their R&D spending dramatically. Also, the population is getting older, chronic ailments are becoming more common, and communicable diseases are on the rise. Thus, these factors boost the market growth.

Europe holds a significant market share, as it has widely adopted microbial manufacturing technology, which is one of the most advanced technologies available in the market. Globally, numerous emerging nations are looking to work with Western giants in order to build their domestic capabilities by offering industrial support services, including clinical research, medication development, and others. The European market is also predicted to see profitable turnover during the projection period, due to easy access to sizable patient populations who are averse to treatment, the presence of highly qualified medical research personnel, and low manufacturing costs.

On the other hand, the APAC market is expected to experience the fastest growth in the coming years, due to the high investments made in the region by big players, significant growth in the pharmaceutical business, and the presence of large outsourcing centers in China, the Philippines, and India. For Japanese nearshore and onshore clients, China is becoming a more appealing location for deliveries.

The LATAM and MEA markets are also predicted to grow significantly in the coming years. This can be attributed to the surging government spending, the rising per capita health spending, and the increasing number of initiatives by the WHO and other government organizations.

Companies Focusing on Expansions and Acquisitions

The market is dominated by a number of players who have used various tactics to increase their revenue and product portfolios, such as new product launches, company expansions, joint ventures, agreements, acquisitions, and partnerships. For instance:

• In December 2021, LabCorp acquired Toxikon Corp. (TC), to increase its development testing capabilities for pharmaceutical, biotechnology, and medical device clients.
• In December 2021, Thermo Fisher completely acquired PPD to expand its service portfolio of analytical testing, clinical research, and laboratory services, among others.

Top Players in Pharmaceutical Analytical Testing Outsourcing Market Are:

• SGS S.A
• Laboratory Corporation of America Holdings
• Eurofins Scientific SE
• Pace Analytical Services LLC
• Intertek Group Plc
• Thermo Fisher Scientific Inc.
• WuXi AppTec Co. Ltd.
• Boston Analytical
• Charles River Laboratories International Inc.
• West Pharmaceutical Services Inc.

Market Size Breakdown by Segment

The report offers a comprehensive market segmentation analysis along with market estimation for the period 2017-2030.

Based on Service

• Bioanalytical
• Method Development & Validation
• Stability Testing

Based on Product

• Active Pharmaceutical Ingredient (API)
• Additives
• Finished Products

Based on End-User

• Biopharmaceuticals
• Pharmaceuticals
• Contract Manufacturing organizations

Geographical Analysis

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • U.K.
  • France
  • Italy
  • Spain
• Asia-Pacific
  • Japan
  • China
  • India
  • South Korea
  • Australia
• Latin America
  • Brazil
  • Mexico
  • Argentina
• Middle East and Africa
  • Saudi Arabia
  • South Africa
  • UAE
  • Egypt