Introducing our pharma R&D research

/ July 3, 2019/ Pharma

We have highlighted several times that the pharmaceutical sector represents ~25% of all R&D spending globally, more than automotive and aerospace. Still, very few vendors service pharma clients, and when they do, they provide manufacturing-related engineering services, but never target R&D departments.

There is therefore a clear growth opportunity for ER&D service vendors. However, this does not mean the opportunity will be easy to seize.

First, the pharma sector still conducts a lot of its R&D activity internally. In the past years, the sector has been complemented by biotech firms. And there is indeed also several firms servicing their large pharma clients, mostly on a T&M basis.

We have started our coverage of this sector and several facts are striking:

  • The pharma ER&D sector is small, with the largest vendor having revenues below USD 3bn and the majority below USD 0.5bn
  • It is not a pure services sector with several vendors being also active in developing their own molecules and IP
  • It is highly technical and relies on a different business model than the ER&D does, for instance, the sector relies on experienced personnel and business models based on an age pyramid are not relevant.

In the past months, we track the performance of this market and understand how accessible the market opportunity is for ER&D vendors. Stay tuned.

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