Global Small Molecule Drug Discovery Market By Therapeutic Area (Oncology, Central Nervous System, Cardiovascular, Respiratory, Metabolic Disorders, Gastrointestinal, and Other Therapeutic Areas), By Process/Phase (Target ID/Validation, Hit Generation and Selection, Lead Identification, and Lead Optimization), By End-user (Pharmaceutical companies, Biotechnology companies, Contract research organizations (CROs), and Others), Region and Companies – Industry Segment Outlook, Market Assessment, Competition Scenario, Trends and Forecast 2024-2033

Report Overview

The Small Molecule Drug Discovery Market size is expected to be worth around USD 121.8 billion by 2033 from USD 52.5 billion in 2023, growing at a CAGR of 8.8% during the forecast period 2024 to 2033.

The small molecule drug discovery market is poised for significant growth, driven by increasing demand for innovative treatments and personalized medicines. Advances in technology, such as artificial intelligence and high throughput screening, are accelerating the discovery process. The rising prevalence of chronic diseases, including cancer and neurodegenerative disorders, is fueling the market growth. Additionally, government initiatives and funding programs are supporting research and development efforts.

The market presents opportunities for players to develop novel therapeutics and address unmet medical needs. The growing focus on precision medicines and targeted therapies is also driving the demand for small molecule drugs. As the demand for precision and personalized medicines increases, the market is projected to have a substantial propulsion during the assessment period.

In 2023, personalized medicines constituted more than one-third of new U.S. Food and Drug Administration (FDA) drug approvals, continuing a trend observed for four consecutive years. Notably, this trend is particularly pronounced in the rare disease domain, where the number of new treatment approvals more than doubled.

Key Takeaways

• Market Size: Small Molecule Drug Discovery Market size is expected to be worth around USD 121.8 billion by 2033 from USD 52.5 billion in 2023.
• Market Growth: The market growing at a CAGR of 8.8% during the forecast period 2024 to 2033.
• Therapeutic Area Analysis: The oncology segment held a significant share of 25.2% and is projected to hold the largest revenue share.
• Process/Phase Analysis: The target ID/validation segment had a tremendous growth rate, with a revenue share of 33.9%
• End-Use Analysis: The pharmaceutical companies segment grew at a substantial rate, generating a revenue portion of 38.7%.
• Regional Analysis: North America dominated the market with the highest revenue share of 36.8%.
• Technological Advancements: Advances in AI and machine learning are accelerating drug discovery processes, leading to more efficient development of small molecule drugs.
• Challenges: High costs and lengthy drug approval processes are major challenges faced by the market.
• Future Opportunities: Expanding applications of small molecules in oncology and immunology present significant growth opportunities in the coming years.

Therapeutic Area Analysis

The oncology segment held a significant share of 25.2% and is projected to hold the largest revenue share in the small molecule drug discovery market. Cancer, characterized by uncontrolled cell growth and spread, drives the demand for effective medications. Factors such as increased research and development efforts and rising cancer incidence contribute to the expansion of this segment. Additionally, ongoing global R&D projects further accelerate market growth.

Process/Phase Analysis

The target ID/validation segment had a tremendous growth rate, with a revenue share of 33.9% owing to the increasing need for precise and effective drug targets. Advances in genomics, proteomics, and bioinformatics enable researchers to identify and validate novel targets more efficiently. The rise of personalized medicine and precision therapy drives demand for targeted treatments, fueling the growth of this segment.

Additionally, the development of innovative technologies such as CRISPR and RNAi facilitates target validation and accelerates drug discovery. These factors are projected to fuel the growth of this segment during the forecast period.

End-user Analysis

The pharmaceutical companies segment grew at a substantial rate, generating a revenue portion of 38.7%. While pharmaceutical giants dominate large-scale drug discovery programs, Contract Research Organizations (CROs) are gaining prominence. CROs specialize in particular drug discovery stages, allowing biotech and pharmaceutical companies to outsource tasks such as hit identification and lead optimization.

This collaborative approach streamlines processes and may become even more significant as drug discovery complexities continue to evolve. Leveraging CRO expertise can potentially expedite the development of critical medications.

Key Market Segments

By Therapeutic Area

• Oncology
• Central Nervous System
• Cardiovascular
• Respiratory
• Metabolic Disorders
• Gastrointestinal
• Other Therapeutic Areas

By Process/Phase

• Target ID/Validation
• Hit Generation and Selection
• Lead Identification
• Lead Optimization

By End-user

• Pharmaceutical companies
• Biotechnology companies
• Contract research organizations (CROs)
• Others

Drivers

Growing Incidence of Chronic Diseases

The growing incidence of chronic diseases significantly influences the small molecule drug discovery market. Chronic diseases, which persist for a year or longer and require continuous medical care, include conditions like HIV, cancer, infections, heart disease, and renal disease. These ailments have a substantial impact on global mortality and morbidity rates, creating a critical demand for innovative and effective therapeutic solutions.

As countries invest heavily in research and development to combat diseases like COVID-19, researchers worldwide explore small-molecule drugs for treatment. During the pandemic, repurposing existing small molecules became crucial to expand therapeutic options, especially for patients with compromised immune systems. Consequently, the market for small molecule drug discovery is expected to grow, driven by the need for diverse treatment options and the rising prevalence of chronic illnesses.

According to the report published by the World Health Organization (WHO), NCDs (noncommunicable diseases) kill around 41 million people every year, equating to 71% of total deaths worldwide. Amongst all NCDs, cardiovascular diseases account for most deaths, which is 17.9 million annually. This is followed by cancer, with 9.3 million people, respiratory ailments, with 4.1 million people, and diabetes, with 1.5 million people.

Restraints

High Drug Development Costs

High drug development costs significantly impact the small molecule drug discovery market. While there’s a rising demand for small-molecule drugs and increased usage in treating chronic diseases, these costs act as a major constraint. These expenses cover various stages, including target identification/validation, hit generation and selection, lead identification, and lead optimization.

Strict regulations further exacerbate the challenge, making it difficult for smaller players to navigate the complex drug development landscape.

Opportunities

Rise in R&D Activities by Market Players

The growth in research and development activities by numerous market players is projected to fuel the market during the forecast period. The R&D activities lead to the development of innovative and novel therapeutics. Increased investment in R&D enables companies to explore new targets and mechanisms, expanding the pipeline of potential small molecule drugs. Collaborations and partnerships among players also facilitate knowledge sharing and accelerated discovery. The surge in R&D activities drives innovation, leading to new treatments and improved patient outcomes.

In January 2022, Arrakis Therapeutics and Amgen entered into a collaboration to advance the research and development of RNA degrader therapeutics. These targeted RNA degraders are small-molecule drugs designed to selectively degrade disease-causing proteins by bringing them close to nucleases. The focus is on challenging-to-drug targets across various therapeutic areas. This innovative approach holds promise for addressing unmet medical needs and advancing precision medicine.

Impact of Macroeconomic / Geopolitical Factors

Macroeconomic and geopolitical factors exert a significant influence on the Small Molecule Drug Discovery market, shaping its growth trajectory and dynamics. The impact of macroeconomic and geopolitical factors on the market is multifaceted. On one hand, the increased healthcare spending and government funding drive market growth by supporting research and development.

On the other hand, trade tensions and export tariffs can disrupt supply chains and impede market growth. However, international collaborations and strategic partnerships can facilitate knowledge sharing and accelerate the market’s growth in the years to come.

Latest Trends

Technological Advancement in the Field of Small Molecule Drug Discovery

One recent trend in the market is the integration of artificial intelligence (AI) and machine learning (ML) technologies. AI & ML are being used to analyze large datasets, identify patterns, and predict drug-target interaction, accelerating the drug discovery process. Various key players are leveraging AI to design novel small molecules and predict their efficacy. AI-driven approaches enable researchers to explore vast chemical spaces and identify promising candidates more efficiently. This trend is transforming the drug discovery landscape.

According to the data published by the Pharmaceutical Journal in July 2024, the total number of AI-discovered drugs has risen exponentially in the past decade, with around 46 of them reaching phase II and III trials in 2023. Drugs repurposed by AI dominated before 2020. However, in recent years, there has been a rise in diverse modes of discovery.

Regional Analysis

North America is leading the Small Molecule Drug Discovery Market

North America dominated the market with the highest revenue share of 36.8% owing to the increasing number of cases of numerous chronic diseases, such as cardiovascular diseases and cancer in this region. Cancer is the second most prevalent cause of death in the US, right after heart disease.

For instance, as per the American Cancer Society’s report published in 2022, around 1.9 million new cases of cancer and 609,360 cancer deaths occurred in the US that year, which equates to about 1,670 deaths per day.

The Asia Pacific region is expected to experience the highest CAGR during the forecast period

Asia Pacific is expected to grow with the fastest CAGR driven by increased investments in drug research and development. Notably, as per the India Brand Equity Foundation (IBEF), the Indian pharmaceutical industry aims to elevate its position in the global value chain by focusing on R&D for drug development.

In FY20, Lupin led in R&D spending, followed by Dr. Reddy’s. Additionally, India has planned to establish a substantial fund of nearly Rs. 1 lakh crore (approximately US$ 1.3 billion) to support domestic pharmaceutical ingredient manufacturing.

Key Regions and Countries

North America

• US
• Canada

Europe

• Germany
• France
• The UK
• Spain
• Italy
• Russia
• Netherland
• Rest of Europe

Asia Pacific

• China
• Japan
• South Korea
• India
• Australia
• New Zealand
• Singapore
• Thailand
• Vietnam
• Rest of APAC

Latin America

• Brazil
• Mexico
• Rest of Latin America

Middle East & Africa

• South Africa
• Saudi Arabia
• UAE
• Rest of MEA

Key Players Analysis

The major players in the Small Molecule Drug Discovery market are actively engaged in the development and introduction of innovative products, as well as implementing strategic initiatives aimed at enhancing their competitive positioning.

These key players partner with biotech firms, research institutions, and pharma companies to leverage expertise and resources. Furthermore, investments in new technologies are made, such as artificial intelligence and machine learning, to enhance drug discovery efficiency.

Top Key Players

• Pfizer Inc.
• GlaxoSmithKline PLC
• Merck & Co. Inc.
• Agilent Technologies Inc.
• Eli Lilly and Company
• Hoffmann-La Roche Ltd
• Bayer AG
• Abbott Laboratories Inc.
• Thermo Fisher Scientific Inc.
• Shimadzu Corp
• Halia Therapeutics
• Sibylla Biotech
• Other Key Players

Recent Developments

• In January 2024, Halia Therapeutics, a clinical-stage biopharmaceutical company, recently concluded a successful Series C funding round, raising US$ 30 million. The company specializes in developing innovative small-molecule drugs designed to combat inflammation. The funding was led by Todd Pedersen, with continued support from existing investors.
• In June 2024, in a strategic partnership, Sibylla Biotech and the University of Texas MD Anderson Cancer Center joined forces to explore and create Folding Interfering Degraders (FIDs). These small-molecule therapies disrupt the proper folding of target proteins, leading to their degradation. The collaboration aims to advance cancer treatment through groundbreaking approaches.

Report Scope