Drug Discovery Segment
At Kalorama, we continue to view contract drug discovery as a high-growth industry. The global drug discovery market reached $5.4 billion in 2007, an increase of 15% from 2006. This market is expected to experience robust growth and exceed $8 billion in 2010 and $14 billion in 2013.
It is possible to outsource all four phases of drug discovery—target identification, target validation, high-throughput screening, and lead optimization. For market analysis purposes, the CRO drug discovery market is segmented by important services across these phases: biology services, HTS, chemistry services, and lead optimization. The largest segment of the contract drug discovery market is chemistry services, which held almost 41% of the market in 2007.
By outsourcing portions of their drug discovery programs, many pharmaceutical and biotechnology companies have found an effective cost-cutting strategy that can also improve the hit-to-lead conversion and early identification of unsuccessful compounds. In view of the fact that outsourcing can accelerate the drug discovery process, the business of contract drug discovery has evolved from providing low-end research services to more value-added high-end research.
A critical bottleneck in the drug discovery process is the hit-to-candidate stage. Scientists interviewed for Kalorama Information’s research report Outsourcing in Drug Discovery generally agreed that the number of potential targets has increased sharply over the last decade, but information about those targets, i.e., sufficient understanding of gene and protein function, especially in the context of biological pathways, has not increased at the same rate. To break the bottleneck, anti-targets need to be eliminated earlier, freeing up researchers to concentrate their time and attention on potential targets of interest.
Another bottleneck is the characterization of ADME properties of new molecular entities in the pipeline. With the number of identified drug targets increasing, candidate compounds with significant ADME and toxicity profiles need to be determined earlier in the process of drug discovery and development. Failure to determine ADME characteristics and physiochemical properties can cause a compound to fail during later drug development stages or in clinical trials.
These are areas where CROs can be of assistance. Advances in genomics, combinatorial chemistry, and high-throughput screening have all contributed to an explosion of new biological targets and new drug leads. Most pharmaceutical and biopharmaceutical companies, however, do not have the expertise or the in-house programs to fully utilize these novel technologies. Thus, in order to keep pace with technological developments and evaluate the usefulness of potential drug compounds more efficiently, companies are turning to outsourcing to increase the efficiency and reduce the over all cost of the drug discovery process.
A key goal of CROs is to provide flex capacity or complementary capabilities for a sponsor’s in-house operations. A sponsor can take advantage of the CRO to avoid or convert certain fixed costs—such as those for maintaining specialized personnel with specific expertise, as well as facility expenses—into variable costs. CROs can also provide expertise for specific needs. Thus, CROs can add momentum to a sponsor’s R&D process, ultimately decreasing development time as well as minimizing the effect on the sponsor’s bottom line.