Formulation Development Outsourcing Market

Demand is high in response to the increased R&D activities to propel market growth.

The growing number of pharmaceutical and biopharmaceutical enterprises outsourcing their services. The growing trend of patent protection expiration of major drugs is driving the market growth. For instance, according to an update in 2021 by the Generics and Biosimilar Initiative, as an element of ongoing activities to enhance the quality of generics and provide an efficient and competitive generics need, the Korean Ministry of Food and Drug Safety (MFDS) declared that 158 patents for pharmaceutical products were expected to expire in 2021.

The MFDS's Green List declares that 44 of the patents will be ready for rapid generics entry, having no additional patents on the products concerned. Thus, this increases the demand for formulation development outsourcing for substitute candidates, thereby contributing to the market CAGR.

However, the growing demand for overcoming the risk associated with formulation development outsourcing further contributes to market growth. As per the report by IQVIA, in developed countries, the demand for generics and biosimilars is expected to grow, improving the medicine spending in these countries. This is likely to improve the demand for formulation development outsourcing of generics and biosimilar post-pandemic. Furthermore, despite the COVID-19 pandemic's immediate concerns, the pharmaceutical industry's quest for innovative and effective therapeutics continues to drive longer-term growth, and clinical research for new and existing COVID-19 therapies continues to expand.

Thus, it is anticipated that this aspect will accelerate formulation development outsourcing market revenue globally.

The focus on speed to market is a significant driver in the Global Formulation Development Outsourcing Market Industry. In a highly competitive pharmaceutical landscape, companies are under pressure to expedite the development and launch of new products. Outsourcing formulation development allows firms to leverage the capabilities of specialized providers, thereby accelerating the overall development timeline. This urgency is reflected in the market's projected growth, with an expected increase to 9.97 USD Billion in 2024. As companies prioritize rapid product development, the outsourcing of formulation services is likely to become an increasingly attractive option.

The Global Formulation Development Outsourcing Market Industry is poised for substantial growth, with projections indicating a rise from 9.97 USD Billion in 2024 to 23.6 USD Billion by 2035. This growth trajectory suggests a compound annual growth rate of 8.14% from 2025 to 2035. Such figures reflect the increasing reliance of pharmaceutical companies on outsourcing to enhance efficiency, reduce costs, and meet regulatory demands. The market's expansion is indicative of broader trends in the pharmaceutical sector, where innovation and specialization are becoming essential for success.

The Global Formulation Development Outsourcing Market Industry experiences a notable increase in demand for biologics, which are complex molecules derived from living organisms. This trend is driven by the growing prevalence of chronic diseases and the need for innovative therapies. As pharmaceutical companies focus on developing biologics, outsourcing formulation development becomes a strategic choice to leverage specialized expertise and reduce time to market. The market for biologics is projected to grow significantly, contributing to the overall growth of the Global Formulation Development Outsourcing Market, which is expected to reach 9.97 USD Billion in 2024 and 23.6 USD Billion by 2035.

Cost efficiency remains a critical driver in the Global Formulation Development Outsourcing Market Industry. By outsourcing formulation development, companies can significantly reduce operational costs associated with in-house development. This approach allows organizations to allocate resources more effectively, focusing on core competencies while leveraging the expertise of specialized service providers. As the market evolves, the potential for cost savings becomes increasingly attractive, particularly for small and medium-sized enterprises. The anticipated compound annual growth rate of 8.14% from 2025 to 2035 underscores the financial advantages that outsourcing can offer, further propelling the growth of the Global Formulation Development Outsourcing Market.

Regulatory compliance and quality assurance are paramount in the Global Formulation Development Outsourcing Market Industry. As regulatory bodies impose stringent guidelines on drug development, companies must ensure that their formulations meet these standards. Outsourcing formulation development to experienced service providers can facilitate adherence to regulatory requirements, thereby mitigating risks associated with non-compliance. This necessity for quality assurance drives pharmaceutical companies to seek external expertise, fostering growth in the outsourcing market. The increasing complexity of regulations further emphasizes the importance of outsourcing, as companies strive to maintain high-quality standards in their formulations.

Technological advancements play a pivotal role in shaping the Global Formulation Development Outsourcing Market Industry. Innovations in drug formulation technologies, such as nanotechnology and 3D printing, enhance the efficiency and effectiveness of drug development processes. These advancements enable companies to create more effective formulations with improved bioavailability and stability. As pharmaceutical firms increasingly adopt these technologies, the demand for specialized formulation development services is likely to rise. This trend is expected to contribute to the market's growth trajectory, with projections indicating a rise to 23.6 USD Billion by 2035, reflecting the industry's adaptation to cutting-edge technologies.

By region, the study provides market insights into North America, Europe, Asia-Pacific and Rest of the World. The North America formulation development outsourcing market accounted for USD 3.61 billion in 2022, with a share of around 45.80%, and is expected to exhibit a significant CAGR growth during the study period. This can be attributed to the increasing burden of chronic diseases and the existence of key players in the region, especially in the US.

As most of the prominent drugs are in the stage of patent expiration, major players are involved in novel drug formulation development outsourcing, which may drive market growth in the region.

Further, the major countries studied in the market report are: The U.S, Germany, Canada, France, UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 3: FORMULATION DEVELOPMENT OUTSOURCING MARKET SHARE BY REGION 2022 (%) 

Source: Secondary Research, Primary Research, Market Research Future Database and Analyst Review

Europe formulation development outsourcing market accounts for the second-largest market share. This is attributed to the presence of a significant number of CROs offering cost-effective formulation developing services, which is one of the major reasons for the largest market share. Moreover, UK market of formulation development outsourcing held the largest market share, and the Germany market of formulation development outsourcing was the fastest-growing market in the region.

The Asia-Pacific formulation development outsourcing market is expected to enhance at the fastest CAGR from 2023 to 2030. Several market players implement strategic initiatives, thereby contributing to market growth. For instance, in October 2021, the Department of Pharmaceuticals (India) drafted new rules to reduce the time required for the approval of innovative products by at least 50% within the next two years, to improve the R&D activities in the country. Such initiatives will likely improve the demand for formulation development outsourcing services in the country.

Further, the China market of formulation development outsourcing held the largest market share, and the India market of formulation development outsourcing was the fastest-growing market in the region.

Key market players are spending a huge amount of money on R&D to expand their product lines, which will assist the market of formulation development outsourcing to grow even more. Market participants are also taking several strategic initiatives to expand their worldwide footprint, with key market developments including new product launches, mergers and acquisitions, contractual agreements, increased investments, and collaboration with other organizations. Competitors in the formulation development outsourcing industry must provide cost-effective items to expand and survive in an increasingly competitive and increasing market environment.

One of the major business strategies manufacturers adopts in the formulation development outsourcing industry to benefit clients and enhance the market sector is manufacturing locally to reduce operating costs. In recent years, the formulation development outsourcing industry has provided drugs with some of the most significant advances. In the formulation development outsourcing market players such as Charles Rover laboratories (US), Laboratory Corporation of America (US), Intertek (US) and others are working on enhancing the market demand by investing in research and formulation development outsourcing activities.

Recro Pharma (REPR) is a specialty pharmaceutical firm that operates through two business divisions. An Acute Care division and a revenue-generating CDMO division. Each of these divisions is deemed a reportable segment for financial reporting purposes. In January 2022, Recro Pharma Inc., an agreement development and manufacturing firm dedicated to solving difficult formulation and manufacturing challenges, especially in small molecule therapeutic development, was awarded a new formulation development and manufacturing contract from a critical department of the US government.

Coriolis is one of the leaders in formulation R&D of (bio)pharmaceutical drugs and vaccines and a globally operating analytical service provider. Their motivation is to allow the development of innovative medicines by performing outstanding biopharmaceutical research to enhance the quality of life for humankind. In January 2022, Coriolis Pharma opened new ATMP Formulation Development Facilities. The new facilities are located near Coriolis’ headquarters in Martinsried, which will significantly increase Coriolis’ capabilities for ATMP development.