Pharma Services Market Observations
Key Themes Impacting the Sector
- Biotech funding had been on a recovery throughout 2024 vs. recent years post-pandemic
- Has been a shift in capital towards later-stage assets and more established players as investors seek to de-risk
- Funding environment should improve as IPO market further recovers and Fed rate cuts are implemented
- Pharma R&D cuts, cost pressure and uncertain IRA impact on revenue
- Several large pharma announced R&D cuts due to pricing uncertainty, and facing mounting pressure from biosimilars
- Trump administration kept IRA drug pricing provisions and seeking most-favored nation pricing, though latter unlikely
- Clinical trials starts and approvals have rebounded
- Recent quarters biotech clinical trial starts have exceeded pre-pandemic levels
- New drug approvals momentum has been choppier, but still slightly outpacing historical levels
- Potential increased capacity and reshoring of drug manufacturing
- Trade policy and geopolitical pressures have spurred announcement of domestic investment in manufacturing capacity
- Construction timing means impact may take years, though stated regulatory cooperation (such as PreCheck) may accelerate
- Drug Pipeline growing and increasingly focused on precision medicines
- Despite recent R&D cuts, total pipeline has grown and increased in pace
- Complex therapies and increases in injectables and biologics require more manufacturing specificity
- Software and tech-enabled clinical trial platforms highly sought after
- Potential to decrease costs, accelerate approval timing and improve data collection and analysis
- Though recognized as promising in areas such as pre-clinical discovery, AI still not being implemented at large scale
Industry Snapshot
$29.9B
Projected U.S. CRO market by 2030
$128.8B
Projected U.S. CDMO market by 2030
20,000+
Drugs currently in development
$126B
Global CRO market expected by 2034
~15% CAGR
Biologics-focused CDMOs, reaching $48.8B by 2030
~28% CAGR
Cell & gene therapy CDMOs, projected at $28.7B by 2030
111 deals
In Q4 2024, signaling Global Pharma Services M&A rebound, with 49 in U.S. and Canada
Q2 2025
North American M&A activity returned to late-2023 levels
>$250B
Annual global pharma R&D spending, continuing to rise with a shift toward biologics and precision medicine
