The pharma services sector is a hotbed for investment, according to Jay Ferguson, director at Houlihan Lokey’s Healthcare Group. He predicts a surge in demand driven by a confluence of positive factors.
Technological Innovations Driving Efficiency
Artificial intelligence (AI) and machine learning (ML) are revolutionizing the pharma services sector. These technologies expedite drug discovery by analyzing vast amounts of data. They can predict potential drug candidates and their effectiveness, significantly reducing pre-clinical research time and costs.
Data analytics is also playing a crucial role. It allows for patient stratification for personalized medicine and optimizes clinical trial design. This translates to better decision-making throughout the drug development process.
Why Pharma Services Are Outpacing Others
Several factors contribute to the rapid growth of pharma services. An aging population, increasing life expectancy, and the rising prevalence of chronic diseases all contribute to a higher demand for pharmaceuticals.
Furthermore, the growing complexity of drug development necessitates specialized expertise. New therapeutic modalities like gene and cell therapies further amplify this need, as they require skills not always available in-house.
Stricter regulations also play a part. Companies are increasingly outsourcing compliance and quality assurance to navigate this complex environment.
Outsourcing Trends: Big Pharma and Beyond
Big pharmaceutical companies are focusing on core competencies like drug discovery and marketing. This leads them to outsource non-core functions such as clinical trials and manufacturing.
The growth of small and mid-sized biotech firms also fuels demand for outsourcing. These companies often lack the infrastructure and resources for in-house research, manufacturing, and commercialization. Pharma services bridge these critical gaps.
What’s Being Outsourced?
As drug development becomes more complex and expensive, pharmaceutical companies are outsourcing critical functions at an increasing rate.
Clinical trial management and data analytics are two of the most frequently outsourced services due to their specialized nature and global scope.
Manufacturing is another area witnessing a rise in outsourcing. Big pharma is divesting manufacturing capacity, particularly for small molecule facilities.
Drug discovery outsourcing is also growing rapidly, especially in early-stage validation. This reflects the industry’s shift towards leveraging external expertise for innovative research.
The Future of Contract Research
The contract research (CRO) market is expected to see significant growth in 2024 and 2025, driven by the outsourcing trend. Consolidation is anticipated within CROs, particularly in clinical site management organizations.
Furthermore, the adoption of AI tools is rapidly transforming drug development and medical writing within CROs. This technological integration is expected to boost efficiency and productivity across the entire CRO market.
Posted May 2024.
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