PHARMACEUTICAL ANALYTICAL TESTING MARKET ANALYSIS

Market Size and Trends

The pharmaceutical analytical testing market is estimated to be valued at USD 8.41 billion in 2024 and is expected to reach USD 15.12 billion by 2031, exhibiting a compound annual growth rate (CAGR) of 8.7% from 2024 to 2031.

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The pharmaceutical analytical testing market is driven by the increased R&D expenditure in pharmaceutical and biotechnology companies. The stringent regulatory guidelines for drug development and safety have increased the demand for analytical testing. Moreover, the growth of generics and biosimilars has significantly contributed to the market expansion. However, the high cost of analytical instruments and lack of skilled professionals are the major factors limiting the market growth.

Increasing R&D investment in drug development

Increased research and development activities, along with collaborations and strategic agreements, are expected to fuel the market growth. For instance, in November 2021, Alcami Corporation, Inc., a contract development and manufacturing organization, entered into a master laboratory services agreement with Novavax, a biotechnology company. Through this agreement, Novavax secured full-time equivalent (FTE) resources to provide analytical testing support for its recombinant nanoparticle protein-based COVID-19 vaccine candidate with Matrix-M adjuvant. These developments are projected to drive market expansion.

Market Concentration and Competitive Landscape

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Increase in outsourcing of analytical testing services 

The pharmaceutical analytical testing market is poised for growth over the forecast period due to the rising global demand for analytical testing services and solutions. For example, bio-pharmaceutical companies utilize analytical testing to characterize biologics and biosimilars, enhance productivity, and ensure real-time product quality control. In July 2021, LGM Pharma, a pharmaceutical outsourcing company, introduced its Analytical Services offering, providing analytical testing and stability services to pharmaceutical industry clients. LGM Pharma now extends its analytical services expertise and facilities as a standalone contract service for pharmaceutical industry clients. Furthermore, the surge in drug approvals and clinical trials worldwide is anticipated to bolster the expansion of the global pharmaceutical analytical testing market. Notably, the number of registered clinical trials has notably increased in recent years. Despite the ongoing impact of COVID-19, the U.S FDA's approval count remained consistent with recent trends last year. In 2021, the FDA's Center for Drug Evaluation and Research (CDER) greenlit 50 novel therapeutics, aligning with the five-year average of 51 drugs per year. A decade ago, the average was 24 drugs per year. This trend is expected to drive market growth.

Key Takeaways of Analyst:

The pharmaceutical analytical testing market is expected to grow steadily driven by the increasing complexity of drug formulations and the stringent regulatory environment. The need for thorough quality control and safety testing during drug production will drive demand for sophisticated analytical testing solutions. North America will continue to dominate due to established pharmaceutical industries and strict quality standards mandated by regulatory bodies. However, Asia Pacific is likely to experience the fastest growth with expanding generic drug manufacturing in countries like India and China. A potential restraint could be the high costs associated with cGMP-compliant analytical testing equipment and infrastructure. This may act as a barrier for small players and drug makers in emerging markets. Further consolidation across analytical instrument vendors may lead to higher prices of analytical solutions in the long run. On the other hand, outsourcing of testing services to specialized CROs presents an opportunity for contract testing laboratories to see higher revenues. Growth of biologics and personalized medicine also opens up opportunities for analytical players to develop specialized solutions for large molecule characterization.

Market Challenges: Stringent regulatory approval process for new drug molecules

Stringent regulations and compliance standards set by global regulatory bodies have increased the compliance burden for companies. Additionally, the cost of analytical method development and validation combined with pressure to reduce drug development timelines and costs has made it difficult for labs to scale operations profitably. Finding skilled analytical chemists and maintaining aging testing equipment also impacts market players. Adopting newer technologies like artificial intelligence and automation comes with associated training and investment costs.

Market Opportunities: Government initiatives to strengthen analytical testing

Government initiatives to enhance analytical testing capabilities offer growth opportunities in the pharmaceutical analytical testing market. For instance, according to the WHO, around 349 vaccines were in development as of April 15, 2022. This is anticipated to drive up the demand for analytical testing services for COVID-19 vaccines that are undergoing clinical trials. Johnson & Johnson tested Ad26.COV2.S, an investigational COVID-19 vaccine candidate, with support from Eurofins Scientific.

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Insights, By Service Type: Bioanalytical testing contributes the highest share of the market owing to increasing R&D investment in biologics and biosimilars

The bioanalytical testing segment holds the largest share which is 42.1% in the pharmaceutical analytical testing market due to growing investment in biologics and biosimilars development. Bioanalytical testing involves quantitative and qualitative analysis of molecules in biological matrices to support pharmacokinetic and bioequivalence studies. With many blockbuster drugs going off-patent, pharmaceutical companies are focusing on developing complex biologics drugs such as monoclonal antibodies, recombinant proteins, and stem cell and gene therapy products. Strict regulatory guidelines around efficacy, safety, and quality testing of these biotherapeutics is also propelling demand for specialized bioanalytical testing services. Additionally, biosimilars market is expected to witness high growth in the coming years. Determining pharmacokinetic similarity between a biosimilar and its reference product requires robust bioanalytical methods and bioanalysis, which contributes to the leading position of this segment. Stringent regulatory oversight and increasing investment in biosimilars development will likely continue driving the need for high quality bioanalytical testing services.

Insights, By End User: Biopharmaceutical companies contribute the highest share of the market owing to their extensive investment in drug development and clinical trials

Biopharmaceutical companies dominate the pharmaceutical analytical testing market as end users due to their large R&D budgets and emphasis on drug innovation with 44.12% of the market share. These companies extensively utilize analytical testing at various stages including method development and validation, stability testing, quality control, and bioequivalence studies to support preclinical and clinical development of new molecular entities. Particularly, outsourcing analytical testing requirements helps these companies to reduce capital investment and access advanced technologies. The complex nature of biologics and biosimilars under development also inflates analytical testing needs of biopharma players. Additionally, stringent regulatory changes regarding pharmaceutical quality necessitates continuous analytical testing of manufactures products post approval as well. Overall, growing R&D expenditure of biopharma giants on novel drug development and clinical trials make them the primary consumer of pharmaceutical analytical testing services worldwide.

Regional Insights

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North America has established itself as the dominant region in the global pharmaceutical analytical testing market with the highest share of 40.2%. The U.S., in particular, accounts for the largest share due to a presence of many major pharmaceutical companies and contract research organizations in the country. Also supporting the market growth is the well-established regulatory guidelines mandating quality control and stringent analytical testing of drugs. This ensures pharmaceutical companies dedicate sizable investments in developing state-of-the-art testing infrastructure and hiring top analytical chemists and scientists. Furthermore, the U.S. FDA regularly inspects pharmaceutical manufacturing facilities and approves new drug applications based on comprehensive analytical reports. This has made pharmaceutical analytical testing a significant part of the drug development and approval process.

The Asia Pacific region has emerged as the fastest growing market for pharmaceutical analytical testing over the past decade. Countries such as India, China, Japan, and South Korea have become global manufacturing hubs for pharmaceutical formulations as well as active pharmaceutical ingredients. This has led to a robust demand for outsourced analytical testing services from both domestic as well as multinational drug companies. The region also attracts considerable investments from major pharmaceutical firms seeking to establish local manufacturing bases and R&D centers. This helps generate additional requirement for analytical methodology development, validation testing services, and routine quality control support. The regulatory mandates across Asia Pacific nations are also progressively becoming more stringent. This translates to higher compliance standards for manufactures and increased dependency on analytical testing providers. The large talent pool of analytical chemists and relatively lower operating costs in some Asia Pacific countries are additional factors driving growth. Lower pricing for testing services allows pharmaceutical companies to gain competitive advantage.

Market Report Scope

Key Developments

• On March 13, 2024, LGM Pharma, a leading contract development and manufacturing organization (CDMO), revealed a significant investment exceeding $2 million in its analytical testing services. This investment accompanies a 50% expansion in offerings. Additionally, the company will introduce suppository manufacturing capabilities and extend its facility in Rosenburg, Texas. These advancements aim to provide customers with more efficient and comprehensive manufacturing solutions.
• On 4 March 2024, SCHOTT Pharma’s PartnerLab, a shop for drug developers, offers a comprehensive suite of analytical tests crucial for drug submission, aiding pharmaceutical companies in navigating complexity, ensuring product quality, and accelerating market entry. Registered with the FDA as an independent lab, SCHOTT Pharma streamlines drug submission processes for its partners.
• In July 2023, Recipharm, a global contract development and manufacturing organization (CDMO), has inaugurated a new analytical laboratory in Bengaluru, India. This investment addresses the growing demand for reliable testing services, filling a crucial market need and prioritizing product safety, regulatory compliance, consumer protection, and patient well-being.
• In March 2022, American Association for Cancer Research (AACR) annual meeting, Transgene, a French biotech company, is set to present a poster featuring promising preliminary Phase 1 data on TG4050, its individual Neoantigen cancer vaccine.
• In March 2021, Teracero Pharma Inc., a pharmaceutical company in collaboration with its German partner nal von Minden GmbH, specialist for in-vitro diagnostics disclosed that Health Canada granted authorization for the importation and commercialization of nal von Minden’s NADAL COVID-19 IgG/IgM Test.

*Definition: Pharmaceutical analytical testing refers to a range of laboratory tests performed on pharmaceutical drug products and substances at various stages of the development and manufacturing processes to ensure safety, efficacy, and consistency. Tests include identity, purity and impurities analysis using techniques such as chromatography, spectroscopy, and dissolution. The results must comply with tight specifications mandated by regulatory authorities to assure quality standards are maintained and finished drug products released for clinical trials and market distribution meet all requirements. Pharmaceutical analytical testing plays a key role in drug development and production.

Market Segmentation

• Service Type Insights (Revenue, USD BN, 2019 - 2031)
  • Bioanalytical Testing
  • Method Development and Validation
  • Stability Testing
  • Drug Substances Testing
  • Others
• End User Insights (Revenue, USD BN, 2019 - 2031)
  • Biopharmaceutical Companies
  • Contract Research Organizations
  • Medical Device Companies
  • Others
• Regional Insights (Revenue, USD BN, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East
    • GCC Countries
    • Israel
    • Rest of Middle East
  • Africa
    • South Africa
    • North Africa
    • Central Africa
• Key Players Insights
  • SGS SA
  • Labcorp
  • Eurofins Scientific
  • Pace Analytical Services LLC
  • Intertek Group plc
  • PPD Inc (Thermo fisher Scietific, Inc.)
  • Wuxi AppTec
  • Boston Analytical
  • Charles River Laboratories
  • West Pharmaceutical Services, Inc
  • Laboratory Testing Inc
  • Steris
  • Fare Labs Food Analysis & Research Laboratory.
  • Bee Pharmo Labs Pvt Ltd
  • Doctors Analytical Laboratories Pvt Ltd.
  • Autocal Solutions Pvt Ltd
  • Apple Pharmaceuticals.