By Guillaume Toulza, Student at McGill University
The global biotechnology market value was estimated at nearly USD 1,225 billion in 2022 and is expected to be worth more than USD 3,210 billion by 2030, or an impressive CAGR of 12.8% over the period, as reported by the latest industry research. Due to significant information asymmetries, industry researchers have no consensus: the most conservative analysts estimate a market value as low as USD 1,345 billion in 2030, while more optimistic reports go as high as USD 3,880 billion. However, CAGR forecasts fall within a reasonably narrow range.
While the North America region dominates the global biotechnology market with a revenue share of about 45% in 2021, the Asia-Pacific region is estimated to grow at a faster pace, with a CAGR of 13.7% from 2022 to 2023 versus 12.9% for the North America region, as reported by the latest industry research. The rising frequency of infectious and chronic diseases pushed governments in the Asia-Pacific region to bolster efforts to upscale their emerging biotech hubs by enhancing R&D investments, accelerating the product approval process, increasing regulatory fit with global standards, and expanding and modernising healthcare infrastructure. Moreover, major industry players from Europe and the US are increasing their presence in the region through FDIs, especially in China, Japan, India, and South Korea.
However, one researcher points out that exceptional market growth is not necessarily paired with the commercial success of the same scale. Notably, the South Korean market continues to rely on early-stage out-licensing with established players on the global stage. This is due to limited domestic capital availability for R&D and limited knowledge of regulatory and commercialisation processes in Europe and the US. Dependence on foreign investments and resources discourages domestic product innovation. While South Korea can leverage its high product quality and relatively low product price, it must also foster domestic marketing talents to facilitate autonomous market penetration.
By contrast, China has successfully positioned itself as a market leader and breakthrough innovator in the Asia-Pacific region, dwarfing the accomplishments of neighbouring biotech hubs. This was achieved through rapid technological advancements, accrued global market visibility, and significant volume in out-licensing and in-licensing deals, in addition to the supportive governmental efforts outlined above. However, analysts anticipate slow progress in research and discovery during the next five years, citing “a lack of a talent pool to effectively transfer innovation from academia to industry and weak collaboration among scientists, medical, and industry professionals.” Some experts suggest that combining the research advantages provided by academic talents with the market advantages provided by biotech firms would result in a business model that best integrates the Chinese biotech ecosystem.
By application, bio-pharmacy accounted for 41.46% of total revenue in the global biotechnology market in 2022 and is expected to grow at a robust CAGR of 13.5%, as reported by the latest industry research. Growth in this segment is fuelled by rising demand for novel medicines. Leaders in the bio-pharmacy industry experienced steady growth in valuation over the last five years, namely AbbVie Inc, AstraZeneca, Eli Lilly & Co, Lonza Group, and Merck & Co. The dominant segment within bio-pharmacy was oncology in 2020. A particularly promising niche market within the oncology segment is the KRAS inhibitors market, with a market value estimated to reach USD 4 billion by 2029, according to a recent report. KRAS is the oncogene with the highest mutation rate. As such, it has emerged as one of the most popular targets in cancer therapeutics. KRAS mutations were until recently considered undruggable. Fortunately, further research and new technology led to the development of KRAS inhibitors. Drug regulatory authorities have since encouraged and sponsored further development of these drugs. Currently, two clinically approved drugs have entered the market, and 60 are still in clinical trials. Many strategic alliances and merger agreements have been announced related to the development of KRAS inhibitors, involving major players in the industry, notably Merck & Co.
While bio-pharmacy is the dominant application in the global biotechnology market by revenue share, forecasts allocate a more rapid growth rate to bioinformatics. Although a nascent application in biotechnology, with revenue of USD 73 billion in 2022, the increasing importance of big data and machine learning methods in all biotechnology fields are inflating bioinformatics development. Especially start-ups developing AI-driven drug discovery (AIDD) are receiving large funding in China, the United Kingdom, and the United States.
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