North America saw a significant funding increase in Q3 2024, jumping from $16.61 billion in Q3 2023 to $25.29 billion. In contrast, Europe experienced a slight decrease in funding, dropping from $6.35 billion to $5.37 billion. APAC saw a positive trend, with funding increasing from $1.28 billion in Q3 2023 to $3.04 billion in Q3 2024, more than doubling the cash injections seen last year.
When comparing the Q3 funding data with Q2 2024, we see that companies in the 101-500 employee range continued to attract the highest level of funding, making up 29% of the total. This trend is consistent with earlier quarters, where mid-sized companies, which typically balance agility with scale, have garnered substantial investor confidence. As these companies approach pivotal points in their clinical trials, CROs targeting this group can expect increased demand for trial support and more complex service requirements.
Interestingly, smaller companies with 1-10 employees also saw sustained interest, receiving $9.32 billion in 2024 YTD funding. This demonstrates that smaller, innovative companies are still driving meaningful activity within the space, despite their size. CROs & CDMOs who can offer flexible and tailored services to these early-stage companies will continue to see opportunities for collaboration.
Oncology remains the top-funded therapeutic area through Q3 2024, capturing 45.4% of total funding across 834 companies. The oncology sector continues to dominate in biopharma investment, with its funding share growing steadily throughout the year. CROs and CDMOs should be prepared for heightened competition when targeting oncology-focused companies, as many service providers are already deeply entrenched in this space.
However, Q3 also saw notable gains in Central Nervous System (CNS) and Metabolic & Endocrine diseases. CNS funding now accounts for 10.6% of the total, with strong momentum as companies look to address complex neurological conditions. Metabolic & Endocrine diseases received 10.1% of funding, showing increased activity compared to earlier in the year. CROs specializing in these therapeutic areas may find growing opportunities as companies in these fields expand their clinical efforts.
Other areas, like Hematology and Ophthalmology, remained stable while emerging sectors such as Musculoskeletal Disease and Vaccines continue to attract attention. Companies in these fields are poised for growth, making them attractive prospects for service providers seeking to diversify beyond oncology.
In Q3 2024, there was a notable rise in Phase 3 study initiations, increasing from 192 in Q3 2023 to 221. This is a clear signal that many late-stage trials are progressing well, and sponsors are gearing up for potential regulatory approvals. CROs that provide specialized support for late-stage trials should expect demand to grow in 2025, especially as biopharma companies race to bring new therapies to market.
Phase 2 study initiations, however, saw a dip from 401 in Q3 2023 to 348, which could indicate some hesitation or delays in moving trials from early-stage to mid-stage development. This might be an opportunity for service providers to offer enhanced support or solutions that streamline the progression through clinical phases.
The sharp rise in Phase 1 study closeouts from 152 in Q3 2023 to 219 in Q3 2024. Signaling a healthy level of trial maturation as sponsors move on to later phases or focus on more promising candidates.
Phase 3 closeouts also saw an increase, which is a positive sign that companies are approaching pivotal regulatory filings. For CROs, this coupled with an increase in Phase 3 initiations can translate to growing demand for end-to-end clinical support, particularly as more companies advance their late-stage candidates.
In North America, the increase in Phase 1 trials from 227 in Q3 2023 to 264 in Q3 2024 underscores the strength of the early-stage clinical pipeline in this region. This bodes well for 2025, as the influx of new trials will likely generate more demand for preclinical and early-stage support services.
Europe saw moderate growth in Phase 1 trials from 63 in Q3 2023 to 79 in Q3 2024, indicating renewed interest in early-stage clinical development in the region. However, the slight dip in Phase 2 trials suggests some bottlenecks in trial advancement, potentially due to regulatory or logistical challenges.
APAC’s rise in Phase 1 trials, from 85 in Q3 2023 to 101 in Q3 2024, signals the growing strength of the region’s early-stage pipeline. While Phase 2 trials declined, the region’s overall clinical trial landscape remains strong. APAC’s increasing funding and early-stage activity position it as an emerging leader in biopharma, particularly for sponsors seeking more cost-effective trial locations.
CROs looking to expand into APAC should prioritize establishing relationships now, as the region is poised for continued growth into 2025, with opportunities spanning early and mid-stage trials.
Figure 10
Gene therapies continue to gain late-phase traction, with the number of upcoming Phase 3 trials increasing steadily from Q3 2023 to Q3 2024. This is a clear indication that gene therapy is transitioning from a niche area to a major therapeutic focus. Phase 1 decreases may be attributed to increased investor caution when dealing with "riskier" assets in the first half of 2024.
CROs that offer specialized support in gene therapies will find themselves in high demand as more companies move from early-stage research into late-stage clinical trials. With regulatory pathways for gene therapies becoming more established, we expect this momentum to carry into 2025.
Cell therapies saw modest growth in Phase 1 trials, but the steady rise in Phase 3 trials highlights the slow but gradual maturation of this space. Cell therapies, much like gene therapies, are advancing at a steady pace, with more companies approaching late-stage trials and eventual commercialization.
For CROs, this is an area to watch closely as many companies are now refining their clinical strategies and preparing for larger-scale trials. As more therapies reach later stages, the demand for manufacturing and commercialization support will also rise.
Yet another useful market sizing exercise is observing the activity of drug developers based on their highest phase of development. During Q3 2024, nearly 6,000 biopharma companies had some level of activity, with a large proportion still in the earlier phases of development.
Early-stage biotechs, particularly those in Phase 1, remain highly active, representing a significant portion of the industry's overall activity. This chart offers a snapshot of the number of companies with activity in Q3, broken down by their highest phase of development. It’s a reflection of both the breadth of innovation in early-stage development and the continued progression of more mature drug sponsors.
The rise in newly identified biotechs from 84 in Q3 2023 to 104 in Q3 2024 signals a healthy influx of innovation in the biopharma space. New biotechs bring fresh ideas and novel approaches, but they also require substantial support to navigate the complexities of clinical trials.
For CROs and CDMOs, engaging with these companies early presents a unique opportunity to become long-term partners as they progress through their development pipelines. This trend suggests that 2025 will be a critical year for establishing relationships with newly emerging biotechs.
Q3 2024 has proven to be an active quarter for biopharma, with significant funding shifts across regions, therapeutic areas, and company sizes. As we look toward the remainder of the year and into 2025, these insights can help sales and marketing teams at CROs and CDMOs strategically align their efforts with the evolving landscape of clinical development.
For a deeper dive into the data, you can download all the charts from this article HERE.