Europe Drug Discovery Market By Drug Type (Small Molecule Drugs and Large Molecule Drugs), By Technology, By End User - Europe Industry Outlook, Key Trends and Forecast 2025-2034

Market Overview

The Europe Drug Discovery Market size is projected to reach USD 22.1 billion in 2025 and grow at a compound annual growth rate of 9.0% to reach a value of USD 48.1 billion in 2034.

The European drug discovery market is focused on the identification, validation, and early-stage development of new therapeutic molecules. It encompasses a broad range of activities, services, and technologies used to discover novel medicines, including both small molecules and biologics. The drug discovery process involves critical steps such as target identification, screening, lead optimization, and early preclinical development.

Europe’s drug discovery ecosystem is supported by a combination of pharmaceutical companies, contract research organizations (CROs), academic institutions, and public-private initiatives, such as the Innovative Medicines Initiative. The region has been a key contributor to the global drug discovery market, playing a prominent role in scientific research and therapeutic development.

In recent years, the market has witnessed significant progress driven by rising R&D investments, a growing focus on biologics and gene/cell therapies, and the increasing adoption of digital technologies such as artificial intelligence (AI) to accelerate early-stage research. Despite these advancements, challenges remain, including complex regulatory requirements, rising development costs, and slower translational progress in certain countries.

Furthermore, while Western Europe remains a stronghold for drug discovery, there has been growing outsourcing of discovery activities to specialised service providers, particularly in countries like Germany, the UK, France, and Switzerland. Additionally, cost-effective operations in Eastern Europe, particularly in countries such as Poland and Hungary, are becoming more prominent, offering a competitive advantage for outsourcing.

Europe’s position in the global drug discovery market is impacted by increasing competition from North America and the Asia-Pacific region. However, Europe continues to evolve through innovations in technology, such as CRISPR and AI-driven modelling, as well as an expanding biologics pipeline. Collaborative efforts between academia and industry are strengthening, and these public-private partnerships are instrumental in addressing critical unmet medical needs.

The European market is expected to see a continued evolution, focusing on new therapeutic modalities like cell and gene therapies, peptides, and recombinant proteins. As these trends evolve, the market will likely see faster and more cost-effective drug development processes, reinforcing Europe’s central role in global drug discovery.

Europe Drug Discovery Market: Key Takeaways

• Market Growth: The Europe Drug Discovery Market size is expected to grow by USD 24.2 billion, at a CAGR of 9.0%, during the forecasted period of 2026 to 2034.
• By Drug Type: The small molecule drugs segment is anticipated to get the majority share of the Europe Drug Discovery Market in 2025.
• By End User: The pharmaceutical companies segment is expected to get the largest revenue share in 2025 in the Europe Drug Discovery Market.
• Use Cases: Some of the use cases of Europe Drug Discovery includes target identification & validation, biologics discovery & development and more

Europe Drug Discovery Market: Use Cases

• Target identification & validation – Using high‑throughput screening and genomics to identify disease‑relevant targets and validate their role in pathophysiology.
• Lead optimization for small/large molecules – Improving lead compounds (small molecules, peptides, biologics) for potency, selectivity, ADMET (absorption, distribution, metabolism, excretion, toxicity) properties.
• Biologics discovery & development – Discovering monoclonal antibodies (mAbs), peptides, recombinant proteins and advancing towards cell & gene therapy platforms.
• AI‑driven drug discovery workflows – Employing artificial intelligence, machine learning and advanced informatics to accelerate compound design, predictive toxicology and virtual screening.

Stats & Facts

• According to the European Federation of Pharmaceutical Industries & Associations (EFPIA) members, around €50 billion was spent on pharmaceutical R&D in Europe in 2023.
• The EU’s pharmaceutical industry employs approx. 900,000 people across Europe (as of the recent data) in the life‑sciences sector.
• Europe accounted for approximately 22.7% of global pharmaceutical revenues in 2024
• Public sector research in drug discovery, between 2010–2016, Europe (Germany, UK, France etc.) accounted for ~19.1% of new drugs discovered from academic R&D spending in that period.

Market Dynamic

Driving Factors in the Europe Drug Discovery Market

Rising biologics & advanced therapy modalities
The shift from small-molecule drugs to biologics, including monoclonal antibodies, recombinant proteins, and gene/cell therapies, is significantly influencing Europe’s drug discovery market. This transition is driving demand for advanced and more specialized discovery services, creating a strong growth environment. The growing focus on large molecule therapies, which generated substantial revenue in 2024, is expected to continue, as these therapies offer targeted treatments for complex diseases, positioning Europe as a key hub for biologics research and innovation. This market shift reflects the broader global trend toward more personalized medicine.

Public-private partnerships & regulatory harmonization

Collaborations fostered by initiatives like the Innovative Medicines Initiative (IMI) and EU-funded programs are streamlining Europe’s drug discovery process. These partnerships between academia, industry, and CROs enhance efficiency and reduce fragmentation in early-stage research. The alignment of regulatory frameworks across Europe further strengthens its attractiveness as an investment destination, encouraging collaboration and enabling more seamless cross-border partnerships. As a result, Europe is better equipped to tackle emerging therapeutic challenges and reduce time-to-market for innovative therapies.

Restraints in the Europe Drug Discovery Market

High cost with declining R&D productivity
While Europe remains a leader in R&D investment, challenges related to productivity persist. Despite substantial funding, European academic institutions have seen declining yields in drug discovery, which impacts the efficiency of translating research into market-ready therapies. This issue, coupled with high discovery costs, long lead times, and complex regulatory hurdles, continues to strain the overall drug development process. As a result, the cost-effectiveness of European drug discovery services is under pressure, leading to a potential slowdown in innovation and commercialization.

Competitive pressure from low-cost regions & regulatory burden
Eastern European countries are becoming attractive alternatives for drug discovery outsourcing due to their lower operational costs, creating competition for Western European markets. However, the broader European landscape faces mounting competition from North America and Asia-Pacific, where regulatory environments are often more flexible and cost-efficient. Strict regulatory frameworks, such as data privacy laws and clinical trial compliance, can slow down drug discovery processes in Europe compared to regions with more streamlined or flexible policies, limiting overall competitiveness.

Opportunities in the Europe Drug Discovery Market

AI & digital transformation in discovery
Europe’s drug discovery market is poised to benefit from the increasing adoption of artificial intelligence (AI) and digital tools. AI-driven platforms such as virtual screening, predictive analytics, and cloud-based informatics are revolutionising early-stage research. This technology enables faster target identification, optimised lead discovery, and improved success rates. The significant growth in AI drug discovery investments provides European players with opportunities to enhance their discovery capabilities, reduce R&D costs, and accelerate time-to-market for novel therapeutics.

Expansion of outsourcing and service models
Outsourcing drug discovery activities to Contract Research Organizations (CROs) is a growing trend across Europe, particularly as pharmaceutical companies seek to optimise costs and access specialised expertise. Europe’s outsourcing market is expected to experience continued growth, with CROs expanding their service portfolios to include biologics, AI-driven workflows, and integrated discovery solutions. Companies that provide flexible, cross-border discovery services are well-positioned to capitalise on this trend, offering attractive solutions to pharmaceutical companies looking to reduce costs and enhance R&D productivity.

Trends in the Europe Drug Discovery Market

Shift to novel modalities and personalized medicine
Europe is increasingly focusing on the development of novel therapeutic modalities such as gene editing (e.g., CRISPR), peptides, recombinant proteins, and biologics. There is also a shift towards personalized medicine, with tailored therapies targeting individual genetic profiles. This trend is driving the adoption of advanced sequence analysis platforms and other informatics tools to improve the precision of drug discovery. As these modalities gain traction, Europe is positioning itself at the forefront of cutting-edge biomedical research and the development of personalized treatment options for a variety of diseases.

Regional cost optimization and pan-European capability building
Countries in Eastern Europe are emerging as cost-effective hubs for drug discovery, particularly in areas like medicinal chemistry and preclinical screening. These countries, such as Poland, Hungary, and the Czech Republic, offer a lower-cost alternative for Western European pharmaceutical companies seeking to optimize their discovery programs. As a result, there is a growing trend of pan-European collaborations that combine the cost advantages of Eastern Europe with the established R&D capabilities of Western Europe, strengthening Europe’s overall drug discovery ecosystem and increasing its competitive edge in the global market.

Impact of Artificial Intelligence in Europe Drug Discovery Market

• AI accelerates target identification by analysing large biological and chemical datasets to prioritise the most promising targets, reducing time from hypothesis to validated target.
• Machine learning models improve lead‑optimisation, predicting ADMET properties and thereby reducing early‑stage failure and cost.
• AI‑driven virtual screening and in silico modelling reduce reliance on expensive wet‑lab screening, enabling more compounds to be evaluated virtually and faster.
• Predictive analytics help in translational research and biomarker discovery, linking preclinical findings with clinical outcomes, which improves attrition rates.
• Combined with robotic high‑throughput screening and automation, AI enables more efficient workflows, allowing European discovery players to compete globally on speed and cost.

Research Scope and Analysis

By Drug Type Analysis

In Europe, the Small Molecule Drugs segment is the leading category in drug discovery, accounting for approximately 70% in 2025 of all discovery activities. This dominance is attributed to Europe’s longstanding expertise in medicinal chemistry, mature infrastructure for synthesis and screening, and a well-established outsourcing ecosystem. These drugs are easier to manufacture, have lower development costs, and benefit from a robust historical pipeline across therapeutic areas. As such, they continue to be the foundation of most pharmaceutical R&D pipelines.

However, the Large Molecule Drugs segment—including monoclonal antibodies, peptides, recombinant proteins, and cell & gene therapies—is emerging as the fastest-growing segment. Driven by the need for targeted and personalized therapies, this segment is gaining traction across Europe, particularly in therapeutic areas like oncology, autoimmune diseases, and rare disorders. Its complexity, higher specificity, and potential for long-term efficacy are contributing to its increasing importance in the discovery landscape.

By Technology Analysis

High Throughput Screening (HTS) remains the most widely adopted technology in Europe’s drug discovery market, accounting for approximately 65% in 2025 of technology-driven discovery workflows. Its popularity is driven by its ability to rapidly screen vast chemical libraries against biological targets, thus accelerating early-stage discovery. HTS systems are well-integrated into pharmaceutical and biotech laboratories across Europe, offering efficiency and reproducibility. This long-standing use and continued technological refinements ensure its dominant position in the discovery process.

On the other hand, AI-based Drug Discovery represents the fastest-growing technology segment. As the demand for precision, speed, and data-driven decision-making rises, AI tools are being increasingly adopted to streamline target identification, virtual screening, and predictive modelling. While still emerging, AI is reshaping the discovery landscape by reducing time and cost associated with early-stage R&D.

By End User Analysis

Among end users, Pharmaceutical Companies lead the European drug discovery market, accounting for approximately 75% in 2025 of all discovery activities. These organisations have substantial internal R&D capabilities and often engage in external collaborations or outsourcing to enhance pipeline development. Their access to capital, regulatory experience, and established infrastructure allows them to drive both small and large molecule discovery at scale. Their dominance is further reinforced by their partnerships with CROs and academic institutions.

The Contract Research Organizations (CROs) segment is, however, the fastest-growing end-user group. CROs are becoming central players in Europe’s discovery landscape, offering integrated services, flexible models, and specialized expertise. As pharmaceutical companies increasingly outsource early discovery work to reduce costs and improve agility, CROs are rapidly expanding their capabilities in biologics, informatics, and advanced screening technologies.

The Europe Drug Discovery Market Report is segmented on the basis of the following:

By Drug Type

• Small Molecule Drugs
• Large Molecule Drugs
  • Monoclonal Antibodies (mAbs)
  • Peptides
  • Recombinant Proteins
  • Cell and Gene Therapies

By Technology

• High Throughput Screening (HTS)
• Pharmacogenomics
• Combinatorial Chemistry
• Nanotechnology
• AI-based Drug Discovery
• CRISPR and Gene Editing Technologies
• Other Technologies

By End User

• Pharmaceutical Companies
• Contract Research Organizations (CROs)
• Academic and Research Institutes
• Government and Public Health Organization

European Countries Analysis

The European drug discovery market is driven by robust R&D ecosystems across key countries such as the UK, Germany, France, Switzerland, and the Netherlands. The UK leads in biotech innovation and academic collaboration, while Switzerland remains a global pharmaceutical hub hosting giants like Roche and Novartis. Germany’s strong industrial base and government-backed innovation funds fuel translational research, whereas France’s expanding public funding and academic networks support early-stage discovery.

The Netherlands benefits from its strategic position as the EMA headquarters and a hub for biotech startups. Nordic countries like Sweden excel in biologics and precision medicine, while Central and Eastern Europe—particularly Poland and the Czech Republic—offer cost-efficient clinical trial and CRO capacities. Overall, Europe’s diverse landscape combines cutting-edge innovation, strong regulatory frameworks, and increasing venture capital investments, positioning the region as a global powerhouse for collaborative drug discovery and pharmaceutical advancements.

By Region

Europe

• Germany
• The U.K.
• France
• Italy
• Russia
• Spain
• Benelux
• Nordic
• Rest of Europe

Competitive Landscape

Europe’s drug discovery ecosystem is characterised by a mix of large pharmaceutical firms, specialist CRO/service providers, biotech startups and academic research collaborators. Key players offer discovery platforms, screening services, biologics development and increasingly AI‑enabled informatics. Competitive differentiation comes through technology leadership (e.g., informatics, AI, gene editing), geographic service footprint, regulatory/regional expertise and partnerships across academia‑industry. Service providers in Europe are increasingly positioning themselves as one‑stop early‑stage discovery partners—from target ID to lead optimisation—to capture greater value and client stickiness.

Some of the prominent players in the Europe Drug Discovery are:

• Roche
• Novartis
• AstraZeneca
• Sanofi
• GlaxoSmithKline (GSK)
• Bayer
• Boehringer Ingelheim
• Merck Group (Merck KGaA, Darmstadt, Germany)
• Johnson & Johnson (Janssen)
• Pfizer
• Eli Lilly
• Bristol-Myers Squibb (BMS)
• AbbVie
• Amgen
• Regeneron Pharmaceuticals
• Vertex Pharmaceuticals
• Moderna
• BioNTech
• UCB Pharma
• Ipsen
• Other Key Players

Recent Developments

• In March 2025,  Roche Holding AG (Switzerland) secured an agreement with Zealand Pharma A/S (Denmark) to acquire development and commercialization rights for the obesity drug candidate petrelintide in Europe and globally (up to USD 5.3 billion), reflecting strong interest in early‑stage discovery assets and biologic modalities.
• In January 2025, Galapagos NV (Belgium) announced its intention to spin off its innovative medicines business into a separate publicly traded entity by mid‑2025, providing around EUR 2.45 billion in cash for the new company. This strategic move aims to sharpen focus on early‑stage R&D and discovery pipelines.

Report Details

Report Characteristics
Market Size (2025)	USD 22.1 Bn
Forecast Value (2034)	USD 48.1 Bn
CAGR (2025–2034)	9.0%
Historical Data	2019 – 2023
Forecast Data	2026 – 2034
Base Year	2024
Estimate Year	2025
Report Coverage	Market Revenue Estimation, Market Dynamics, Competitive Landscape, Growth Factors, etc.
Segments Covered	By Drug Type (Small Molecule Drugs and Large Molecule Drugs), By Technology (High Throughput Screening (HTS), Pharmacogenomics, Combinatorial Chemistry, Nanotechnology, AI-based Drug Discovery, CRISPR and Gene Editing Technologies, and Other Technologies), By End User (Pharmaceutical Companies, Contract Research Organizations (CROs), Academic and Research Institutes, and Government and Public Health Organizations)
Regional Coverage	Europe – Germany, The UK, France, Russia, Spain, Italy, Benelux, Nordic, & Rest of Europe
Prominent Players	Roche, Novartis, AstraZeneca, Sanofi, GlaxoSmithKline (GSK), Bayer, Boehringer Ingelheim, Merck Group, Johnson & Johnson, Pfizer, Eli Lilly, Bristol-Myers Squibb (BMS), AbbVie, Amgen, Regeneron Pharmaceuticals, Vertex Pharmaceuticals, Moderna, BioNTech, UCB Pharma, Ipsen, and Other Key Players
Purchase Options	We have three licenses to opt for: Single User License (Limited to 1 user), Multi-User License (Up to 5 Users), and Corporate Use License (Unlimited User) along with free report customization equivalent to 0 analyst working days, 3 analysts working days, and 5 analysts working days respectively.