Pharmaceutical Analytical Testing Outsourcing Market

Global Pharmaceutical Analytical Testing Outsourcing Market Size (2024 to 2029)

The size of the global pharmaceutical analytical testing outsourcing market is predicted to be worth USD 14.57 billion by 2029 from USD 9.28 billion in 2024, growing at a CAGR of 9.44% during the forecast period.

MARKET DRIVERS

The growing demand for pharmaceuticals is primarily driving the growth of the pharmaceutical analytical testing outsourcing market.

It is essential for pharmaceutical companies to make sure the products they manufacture are safe, effective, and of high quality before releasing them into the market. Analytical testing plays an important role in the drug development process. It is used to evaluate the chemical and physical properties of the drug and to ensure its purity, stability, and potency. Pharmaceutical companies have increasingly used third-party testing laboratories to outsource their analytical testing services in recent years and this trend is estimated to fuel in the coming years and drive market growth. The specialized third-party testing laboratories equips with specialized expertise, advanced technologies, and state-of-the-art facilities, which cost significant amounts for pharmaceutical companies to establish and have their own facilities and prefer outsourcing. In addition, outsourcing significantly helps pharmaceutical companies to reduce their operational costs and improve overall efficiency. Considering these factors, pharmaceutical companies increasingly prefer to outsource their analytical testing.

The growing complexity of drug development is leading to the growth of the pharmaceutical analytical testing outsourcing market.

Due to the increasing complexity of drug development, the need for accurate and reliable analytical testing is also equally growing, which includes testing for quality, purity, potency, stability, and other characteristics of drugs that play a notable role in the regulatory approval and commercial success of the pharmaceutical products. The majority of pharmaceutical companies do not have the ability and resources to establish the in-house expertise to execute these tests effectively and depend on specialized laboratories or contract research organizations. Outsourcing analytical testing to the CROs is a cost-effective solution for pharmaceutical companies as they are not required to invest in expensive equipment and personnel. By outsourcing analytical testing services, pharmaceutical companies can focus on their core competencies.

Stringent regulatory requirements that pharmaceutical companies must follow for drug approval from the regulatory bodies to launch their products in the market, which are complex and need access to expertise and advanced technologies and cost significant investments for the pharmaceutical companies to establish in-house. For these needs, pharmaceutical companies depend on third-party service providers with expertise and access to advanced technologies that can do the analytical testing complying with the guidelines of regulatory bodies, which is expected to boost the growth of the pharmaceutical analytical testing outsourcing market during the forecast period.

In addition, cost savings associated with outsourcing analytical testing to specialized third-party service providers and CROs to pharmaceutical companies, an increasing number of technological developments in analytical testing technologies and techniques and a rising emphasis on personalized medicine accelerate the market’s growth rate.

MARKET RESTRAINTS

The growth of the global pharmaceutical analytical testing outsourcing market is expected to be hampered by operational expenses, changes in good manufacturing practices (GMP), regulatory policies, and shorter turnaround times. Some of the challenges that threaten to restrict the expansion of the pharmaceutical analytical testing outsourcing market include a scarcity of experienced specialists and a well-established healthcare infrastructure. The scarcity of skilled professionals to conduct the required quality of analytical testing in some countries further hinders the market’s growth rate.

REPORT COVERAGE

SEGMENTAL ANALYSIS

Global Pharmaceutical Analytical Testing Outsourcing Market Analysis By Product Type

The active pharmaceutical ingredient segment had the major share of the global pharmaceutical analytical testing outsourcing market in 2023 and is estimated to grow at a notable CAGR during the forecast period. The growth of the segment is majorly driven by the rising demand for generic drugs and the increasing number of CMOs and CROs. The growing need for efficient and cost-effective testing methods is further fuelling the growth rate of the segment. In recent years, pharmaceutical companies have been increasingly outsourcing their API testing to emphasize their core competencies and this trend is expected to accelerate further in the coming years and contribute to the segment’s growth rate. Furthermore, the growing patient population suffering from chronic diseases is boosting the need for improved API, which is expected to boost the growth rate of the segment.

The additives segment accounted for a substantial share of the worldwide market in 2023 and is expected to witness a healthy CAGR during the forecast period. The segmental growth is driven by the increasing demand for improved drug formulations and the growing need for testing to ensure the safety and efficacy of these formulations. The growing number of biopharmaceutical companies is further fuelling the growth rate of the segment.

The finished products segment is estimated to register a steady growth rate during the forecast period owing to factors such as growing demand for safe and effective drugs, the rise in the number of regulatory requirements for drug approval, and the need for efficient testing methods. The growing trend of outsourcing manufacturing activities, particularly for complex biologics is another notable factor boosting the growth rate of the segment.

Global Pharmaceutical Analytical Testing Outsourcing Market Analysis By Service

The bioanalytical testing segment is predicted to witness the fastest CAGR during the forecast period in the worldwide pharmaceutical analytical testing outsourcing market. Factors such as the growing demand for clinical trials, the increasing need for advanced technologies for drug discovery and development, and the rising prevalence of chronic diseases majorly propel segmental growth. In addition, the growing number of drug approvals and the increasing demand for personalized medicine further fuel the growth rate of the segment. For instance, the USFDA approved 53 new drugs in 2020, which was the highest in the last two decades.

Global Pharmaceutical Analytical Testing Outsourcing Market Analysis By End-Users

The biopharmaceutical and pharma companies segment accounted for the most significant share of the global market in 2023 and is expected to grow promisingly during the forecast period. The benefits of outsourcing analytical testing activities, such as cost-effectiveness, time-saving, and improved efficiency to the biopharmaceutical and pharmaceutical companies, majorly drive segmental growth. In addition, the increasing trend of outsourcing, rising complexities in drug development and the growing need to develop effective drugs to treat chronic diseases drive segmental growth.

REGIONAL ANALYSIS

Geographically, the North American pharmaceutical analytical testing outsourcing market region accounted for the largest share of the worldwide market in 2023 and is expected to grow at a noteworthy CAGR during the forecast period. The growth of the North American market is majorly driven by the growing demand for pharmaceuticals, strict regulations by regulatory authorities, and the rising costs of drug development. In addition, the presence of several biopharmaceutical and pharmaceutical companies in the North American region and the increasing adoption of outsourcing services further fuel the growth rate of the North American market. The U.S. market held the largest share of the North American market in 2022, followed by Canada.

Europe is predicted to be another notable region worldwide for the pharmaceutical analytical testing outsourcing market. The European market is expected to capture a substantial share of the global market during the forecast period owing to the increasing number of pharmaceutical companies, the growing adoption of outsourcing and the presence of sophisticated healthcare infrastructure. Furthermore, the rising need for cost-effective drug development and the availability of skilled labor in emerging economies boost the growth rate of the European market.

The APAC pharmaceutical analytical testing outsourcing market is a lucrative regional market for pharmaceutical analytical testing outsourcing and is predicted to witness the highest CAGR during the forecast period. Factors such as the availability of skilled labor at a lower cost and the presence of a large patient population in the APAC countries drive regional market growth. India and China are predicted to hold the largest share of the APAC market during the forecast period owing to the growing pharmaceutical and biopharmaceutical industries in these countries.

Latin America had a considerable share of the worldwide market in 2023 and is expected to grow at a steady growth rate during the forecast period. The growth of Latin American is primarily driven by the demand for generic drugs, increasing investments in the pharmaceutical industry and lower drug manufacturing costs. Brazil held the major share of the Latin American market in 2023.

MEA is expected to witness a sluggish CAGR during the forecast period owing to the increasing demand for healthcare services and the increasing patient population with chronic diseases.

KEY PLAYERS IN THE GLOBAL PHARMACEUTICAL ANALYTICAL TESTING OUTSOURCING MARKET

SGS SA, Toxikon, Inc., Eurofins Scientific, Pace Analytical Services, Inc., Intertek Group Plc, Pharmaceutical Product Development, LLC., WuXi AppTec, Inc., Boston Analytical, Charles River Laboratories International, Inc. and West Pharmaceutical Services Inc. are some of the prominent companies operating in the global pharmaceutical analytical testing outsourcing market profiled in this report.

RECENT HAPPENINGS IN THIS MARKET

• SGS SA invested USD 3.84 million in a two-phase expansion project at its Poitiers, France, laboratory in December 2018 to achieve a 50 percent increase in bioanalytical capabilities by 2020.
• In September 2018, Eurofins acquired Clinical Research Laboratories, and Charles River Laboratories International, Inc. acquired MPI Research.

DETAILED SEGMENTATION OF THE GLOBAL PHARMACEUTICAL ANALYTICAL TESTING OUTSOURCING MARKET INCLUDED IN THIS REPORT

This market research report on the global pharmaceutical analytical testing outsourcing market has been segmented and sub-segmented based on the product type, service, end-users & region.

By Product Type

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

By Service

• Bioanalytical Testing
  • Clinical
  • Non-clinical
• Method Development & Validation
  • Extractable & Leachable
  • Impurity Method
  • Technical Consulting
  • Others
• Stability Testing
  • Drug Substance
  • Stability Indicating Method Validation
  • Accelerated Stability Testing
  • Photostability Testing
  • Others

By End-User

• Biopharmaceuticals And Pharma Companies
• Contract Manufacturing Organizations
• Others

By Region

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East and Africa