Global Functional Service Providers Market Overview
The Functional Service Providers Market size was valued at USD 14.26 billion in 2023 and is projected to grow from USD 15.43 billion in 2024 to USD 27.76 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 8.68% during the forecast period (2024 - 2032).
The factors contributing to the growth of the market are increasing R&D investments and rising number of clinical trials.
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
January 2024: One of the most prominent clinical research organizations (CROs) providing organizations across the globe with a complete variety of Phase I to IV clinical development services, Parexel, and the first and leading non-profit cancer research organization in Japan, the Japanese Foundation for Cancer Research (JFCR), on January 18th disclosed that a deliberate collaboration to boost access to oncology clinical trials in Japan. As per the deal, JFCR will join hands with Parexel's Global Site Alliance network, making it an ideal site for oncology clinical trials and offering more opportunities for Japanese patients to take part in cancer research. Parexel will use JFCR's knowledge to assist sponsors in building practices that better align with Japan's standard of care and guide approval processes, following simplified patient recruitment and study start-up. The Parexel Corporate Vice President and General Manager of Japan, Shigehiro Miki, said that consistent with global trends, the prevalence of cancer is anticipated to increase in Japan. He further added that the company looks ahead to JFCR joining Parexel's Site Alliance Network and operating together to remove barriers and enhance access to potentially life
-changing treatments for Japanese patients. With an experience of more than 115 years, JFCR is Japan's biggest and first medical company devoted to cancer care. The company is famous for its cross-functional, state-of-the-art research facilities, holistic cancer center, and massive number of patients under their care. JFCR's therapeutic knowledge, in arrangement with Parexel's clinical research experience, will allow both organizations to effectively appoint Japanese patients who are often undersold in oncology research while growing cancer care options in Japan. The MD, PhD, FRCS, Hospital Director, Cancer Institute Hospital of JFCR, Takeshi Sano, said that JFCR and Parexel enter into this deliberate collaboration shaped by a shared sense of urgency to enable sponsors to perform trials in Japan and guarantee these patients have access to innovative clinical research.
Functional Service Providers Market Trends
- Increasing R&D investments
Rising R&D investments, especially in the biopharmaceutical and biotechnology industries, have created a need for functional service providers (FSPs) in the global market. Research showed that the use of FSPs by large biopharmaceutical companies is growing at more than 13% annually. These service providers offer staff to biopharmaceutical and biotechnology companies in their research & development projects. They provide highly qualified research associates, data managers, study coordinators, medical monitors, and other related staff support to these companies. Biopharmaceutical and biotechnology companies are focused on continuous research and are working on developing and adopting new technologies and processes. On average, biopharmaceutical companies invest approximately USD 2.6 billion in developing one new medicine. The US biopharmaceutical industry has been a global leader in biopharmaceutical manufacturing for more than 30 years.
Furthermore, there has been a significant increase in clinical trials for various medications and procedures in recent years. Clinical trials remain vital for the R&D of new drugs and have grown more complex over the years. As clinical research becomes lengthier, the cost of drug development will continue to rise. The success rates of the clinical trials depend primarily on the drugs or products being developed and the stage of the trial. A recent study found that only around 9% of drugs make it from phase I to approval.
Moreover, FSPs offer solutions such as trial management, clinical monitoring, data management, statistical programming, biostatistics, medical writing, and lifecycle safety and regulatory affairs. The time-consuming and expensive nature of clinical trials and the issues caused by the high workload result in the rising popularity of FSPs. These providers save the time of the company and reduce operational costs. It helps companies turn fixed costs into variable costs without sacrificing control or quality.
Therefore, the burgeoning R&D activity in biopharma and biotech sectors, coupled with the complex and expensive nature of clinical trials, has fueled the demand for functional service providers (FSPs). FSPs, by offering skilled workforce, diverse solutions, and cost-efficiency, enable biopharma/biotech companies to streamline their research, optimize R&D costs, and ultimately bring innovative drugs to market faster.
Functional Service Providers Market Segment Insights
Functional Service Providers Market Type Insights
Based on type, the Functional Service Providers Market has been segmented into clinical monitoring, medical writing, data management, pharmacovigilance, biostatistics, programming, study design, and others. Clinical monitoring segment held the largest market in 2022 with market share 26.47%. Clinical monitoring is the act of overseeing the progress of a clinical trial and ensuring that it is conducted, recorded, and reported in compliance with the protocol, SOPs, and clinical trials regulations. The FSPs provide trained experts such as clinical research associates and clinical trial managers with onsite & remote monitoring visits to deliver the results. In addition, medical communication is important to support the regulatory success of the product in clinical development. The complexity of the clinical trial needs to be translated into the clear documentation for the molecule or medical device and this preparing such documentation is call medical writing.
Therefore, effective clinical trials rely on a collaborative effort between expert monitoring, transparent communication, and skilled medical writing to pave the way for successful product development, fuels the FSP’s demand in the market.
Functional Service Providers Market Stage Insights
Based on stage, the Functional Service Providers Market has been segmented into clinical development and post approval. Clinical development held the largest market share in 2022, and the fastest-growing segment during the forecast year i.e., 2023-2032. The factors positively contributing to the segment’s growth are increasing investments in R&D by biopharmaceutical, biotechnology, and pharmaceutical companies will create demand for functional service providers to outsource clinical development for new drug discovery, also cutting-edge technologies, innovative approaches, and expert guidance to provide its post-approval services. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), in 2020, the member companies of PhRMA such as Bristol-Myers Squibb Company (US), AbbVie (US), Pfizer Inc. (US), and Novartis AG (Switzerland) have invested USD 91,100 million in R&D.
FIGURE 2: FUNCTIONAL SERVICE PROVIDERS MARKET, BY STAGE, 2023 & 2032 (USD BILLION)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Functional Service Providers Market Application Insights
Based on application, the Functional Service Providers Market has been classified as biopharma companies, biotech companies, medical devices companies, and research center and academic institutes. Biopharma companies held the largest market share in 2022 and is anticipated to register the highest CAGR from 2022 to 2032. This is owing to factors such as the rising R&D investments in the biopharmaceutical industry leads to innovation of new drugs and other medical products, and increased research funding to academic institutes is further driving growth for this segment. The National Institutes of Health (NIH) was funded with USD 4,200 million in the US in 2022 for research purposes, a 7% increase compared to 2019.
Functional Service Providers Market Regional Insights
By region, the study segments the market into North America, Europe, Asia-Pacific, and Rest of the World. North America accounted for the largest market share of 42.64% in 2022 owing to the presence of active industry players in the region such as IQVIA (US), Parexel (US), and Labcorp Drug Development (US), developed healthcare infrastructure and a high number of clinical trials are propelling the market's growth in the North America. According to ClinicalTrials.gov, there were 393,739 clinical studies registered globally till October 2021, out of which 127,129 (32%) were in the US. Moreover, a total of 60,947 recruiting studies were recorded globally, of which 34% were based in the US.
Further, the major countries studied are: The US, Canada, Brazil, Germany, France, the UK, Italy, Spain, China, India, Japan, South Korea, Australia.
FIGURE 3: FUNCTIONAL SERVICE PROVIDERS MARKET, BY REGION, 2023 & 2032 (USD MILLION)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Europe is anticipated to witness significant growth during the forecast period market owing to a well-developed healthcare infrastructure that supports extensive clinical studies. Due to the stringency of regulatory bodies such as the European Medicines Agency (EMA), there is a high demand for FSP services to provide expertise for higher chances of product approval. According to the EMA, around 4,000 clinical trials take place every year across the European Union (EU) countries. Moreover, according to the WHO, in May 2020, Germany, the UK, and France held the 4th, 5th, and 7th places, respectively, in the top 10 countries with the highest number of clinical trials. Furthermore, the Germany functional service providers market held the largest market share in 2022 and UK functional service providers market is the fastest growing market in the Europe region.
The growth of the market in Asia-Pacific is predicted to rise rapidly and is a favorable environment for conducting clinical trials. The APAC region has become a hotspot for conducting clinical trials due to various factors such as high patient population, reduced costs of conducting trials, and favorable regulatory policies. As per Pharma Intelligence UK Limited (UK), the Asia-Pacific (APAC) region accounted for 50% of clinical trial activity globally in 2021. Moreover, in APAC, China accounted for 45%, followed by Japan (21%), South Korea (13%), Australia (11%), and India (10%) in 2021. Moreover, China functional service providers market held the largest market share in 2022 and is the fastest growing market in the Asia-Pacific region.
Analyst Comment
Functional Service Providers Market Key Market Players & Competitive Insights
The global functional service providers (FSP) market is characterized by the presence of many international, regional, and local players. Increasing R&D investments, rising number of clinical trials, lower operational costs and improved service quality, and the rise of FSP outsourcing in drug development make the FSP market lucrative. To expand their reach and optimize their operating costs, the major players focus on obtaining regulatory authorizations from government agencies for their products and emphasize acquisitions and product launches to gain a substantial market share.
The growth of market players is dependent on market conditions, government support, and industry development. Thus, functional service providers should focus on expanding geographically and improving their services. Although international players dominate the market, regional and foreign players with small market shares also have a considerable presence in the global FSP market.
IQVIA Inc. (US) is a provider of advanced analytics, technology solutions, and clinical research services. It offers a broad range of solutions, including clinical development strategies, predictive and prescriptive analytics, therapeutic expertise, and patient retention services. The company caters to consumer health, biopharma, and medical technology industries across the world. Additionally, it employs more than 70,000 experts across approximately 100 countries worldwide. Moreover, in February 2020, the company launched Avacare Clinical Research Network to augment the opportunities for clinical trials and research options. The Avacare Network is expected to accelerate clinical trials, reduce the cost of care, and advance research to match consumer requirements.
Key Companies in the Functional Service Providers Market includes.
Functional Service Providers Industry Developments
October 2021: Rho, Inc. partnered with Medidata (US), a Dassault Systèmes company to enhance its clinical trial platform. This strategic partnership aims to offer rapid reporting of cross domain and cross-study data in decentralized trials.
August 2019: Laboratory Corporation of America Holdings (US) launched laboratory data management functional service provider for pharmaceutical and biotechnology customers. The launched product aims to assist companies in optimizing costs, streamline the operations, and improve reconciliation.
June 2019: Quanticate International Limited (UK) launched QVigilance to offer dedicated pharmacovigilance (PV) and risk management services. QVigilance aims to support small and medium enterprises from clinical trials to establishing compliant pharmacovigilance systems.
May 2019: Wuxi AppTec Co., Ltd. (China) acquired Pharmapace (US) to augment the biometric services for clinical development. This acquisition has added new services further enhancing the FSP product pipeline.
Functional Service Providers Market Segmentation
Functional Service Providers Market Type Outlook
- Clinical Monitoring
- Medical Writing
- Data Management
- Pharmacovigilance
- Biostatistics
- Programming
- Study Design
- Others
Functional Service Providers Market Stage Outlook
- Clinical Development
- Post Approval
Functional Service Providers Market Application Outlook
- Biopharma Companies
- Biotech Companies
- Medical Devices Companies
- Research center and Academic Institutes
Functional Service Providers Market Regional Outlook
- North America
- Europe
- Germany
- France
- UK
- Italy
- Spain
- Rest of Europe
- Asia-Pacific
- China
- India
- Japan
- South Korea
- Australia
- Rest of Asia-Pacific
- Rest of the World
- Middle East
- Africa
- Latin America
| Report Attribute/Metric |
Details |
| Market Size 2023 |
USD 14.26 billion |
| Market Size 2024 |
USD 15.43 billion |
| Market Size 2032 |
USD 27.76 billion |
| Compound Annual Growth Rate (CAGR) |
8.68% (2024-2032) |
| Base Year |
2023 |
| Forecast Period |
2024-2032 |
| Historical Data |
2019 & 2021 |
| Forecast Units |
Value (USD Billion) |
| Report Coverage |
Revenue Forecast, Competitive Landscape, Growth Factors, and Trends |
| Segments Covered |
Type, Stage, Application, and Region |
| Geographies Covered |
North America, Europe, Asia Pacific, and Rest of the World |
| Countries Covered |
The US, Canada, Brazil, Germany, France, the UK, Italy, Spain, China, India, Japan, South Korea, Australia. |
| Key Companies Profiled |
IQVIA Inc. (US), Laboratory Corporation of America Holdings (US), Parexel International Corporation (US), Icon Plc (Ireland), PPD Inc. (US), Quanticate International Limited (UK), BioPoint Inc. (US), RHO, Inc. (US), Wuxi AppTec Co., Ltd. (China), and KPS Life, LLC (US) |
| Key Market Opportunities |
· Biopharma and Biotech’s digital transformation |
| Key Market Drivers |
· Increasing R&D investments· Rising number of clinical trials· Lowered operational cost and improved service quality· Rise in FSP outsourcing in drug development |
Functional Service Providers (FSP) Market Highlights:
Frequently Asked Questions (FAQ) :
The Functional Service Providers Market is anticipated to reach 27.76 billion by 2032 at a CAGR of 8.68% during the forecast period of 2024-2032.
The US held a 94.94% share of the North America for functional service providers market in 2022.
The Functional Service Providers Market is expected to grow at an 8.68% CAGR during the forecast period from 2024 to 2032.
The North America region market held the largest market share in the Functional Service Providers Market.
The key players include IQVIA Inc. (US), Laboratory Corporation of America Holdings (US), Parexel International Corporation (US), Icon Plc (Ireland), PPD Inc. (US), Quanticate International Limited (UK), BioPoint Inc. (US), RHO, Inc. (US), Wuxi AppTec Co., Ltd. (China), and KPS Life, LLC (US).
The clinical monitoring segment led the Functional Service Providers Market in 2022.
Clinical development segment had the largest market in 2022 with a market share 66.29%.
