This is the first report in a 3-part series on how AI is reshaping discovery, pre-clinical, and clinical research in drug R&D.
Bringing a drug to market traditionally involves staggering costs — averaging $1.3B when accounting for all failed compounds — and costs continue to rise as productivity in the drug R&D process declines.
AI has the potential to break this pattern by dramatically accelerating drug discovery and reducing costs.
In this report, we focus on big pharma’s investments, M&A, and partnership activity to highlight emerging use cases, as well as potential acquisition and partnership targets.
Key themes from our analysis include:
- Biologics developers using AI have secured $1.6B in 2024 — more than double 2023 funding — dominated by Xaira Therapeutics’ $1B raise. The focus on biologics signals that AI capabilities are broadening from their foundation in small molecules to include larger and more computationally complex therapeutics.
- AI drug discovery M&A is surging, with 8 of the 10 largest deals in the sector occurring since 2023. The 10 total M&A exits during that time have more than doubled the industry’s historical M&A activity — reflecting both a maturing technology and growing urgency among larger players to bring AI tech in-house.
- All 10 of the largest big pharma players globally have partnered with AI drug discovery startups since 2023, while 9 out of 10 are simultaneously developing in-house AI capabilities. They’re also buying up therapeutics from AI drug discovery players, as seen with Takeda’s $4B acquisition of Nimbus Therapeutics’ plaque psoriasis treatment in 2023.
We based our analysis on CB Insights’ AI in drug discovery expert collection. The dataset includes over 500 companies applying AI to the discovery phase, defined here as the period between project inception and lead nomination.
Top applications for AI in the discovery phase
AI offers the most potential in 4 key areas of the discovery phase. We describe each below, alongside select companies that have recently demonstrated commercial traction.
