Market Overview
AI in Drug Discovery: Pharmaceutical companies face numerous challenges during drug development, including extended timelines, high R&D investments, and stringent regulatory requirements. The increasing demand for advanced therapies has introduced new complexities such as large-scale data collection and analysis, a need for skilled professionals, and ensuring data security. Artificial Intelligence (AI), which mimics human intelligence processes, has become increasingly valuable in the pharmaceutical sector. AI applications span from research and development (R&D) and drug discovery to diagnostics, disease prevention, remote monitoring, and epidemic prediction. The integration of AI in drug discovery has led to improved success rates, faster delivery processes, and access to new biological insights.
The market for AI in drug discovery is growing due to the rising need to reduce drug discovery turnaround times, expanding applications of AI, the increasing prevalence of chronic diseases, and the high threat of emerging infectious diseases. Additionally, the adoption of machine learning (ML), the emergence of regional start-ups, and increased investments in R&D present growth opportunities for the market.
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Chronic Diseases Drive AI Adoption in Drug Discovery
The prevalence of chronic diseases such as chronic obstructive pulmonary disease (COPD), diabetes, coronary artery disease, hepatitis, arthritis, and cancer continues to rise. According to the Centers for Disease Control and Prevention (CDC) data published in December 2022, six out of ten adults in the U.S. suffer from a chronic disease. Similarly, the European Commission reported in 2021 that over 35.2% of individuals in the European Union had chronic diseases.
The International Diabetes Federation reported that 502 million people worldwide had diabetes in 2020, with an estimated 23.4 million new cancer cases expected annually by 2032. Lung cancer remains the leading cause of cancer mortality in Asia-Pacific, underscoring the need for advanced therapies. The increasing burden of chronic diseases has amplified the demand for advanced therapies, boosting AI applications in drug discovery to accelerate the development of effective treatments.
Investment Surge in AI for Drug Discovery
The growing role of AI in drug discovery is reflected in increased investments and collaborations between pharmaceutical companies and AI firms. According to Stanford University’s Institute for Human-Centered Artificial Intelligence (HAI) 2020 report, investments in AI for drug discovery reached USD 13.8 billion. The trend continued in 2021 when Exscientia (U.K.), a clinical-stage pharma tech company, raised USD 225 million in a Series D funding round to enhance its proprietary pipeline and AI-driven drug discovery capabilities.
These investments enable pharmaceutical companies to leverage AI technologies to streamline drug discovery processes, reduce costs, and improve clinical outcomes. Partnerships between AI and pharmaceutical companies are also helping to integrate AI into drug research and development workflows more effectively.
Market Segmentation by Offering
In 2025, the software segment is expected to account for the largest share of the AI in drug discovery market. Software solutions are increasingly used in drug discovery for faster, more efficient, and cost-effective drug development processes. Pharmaceutical companies are particularly interested in AI-driven software due to its ability to enhance clinical trials and expedite novel therapy development.
Deployment Mode: Cloud-based Models on the Rise
The cloud-based deployment segment is projected to grow at the highest compound annual growth rate (CAGR) during the forecast period. Cloud-based models offer enhanced security, flexibility, and data storage capabilities. They also provide quick accessibility and cost-efficiency, which are critical for pharmaceutical companies managing vast amounts of data during drug discovery and clinical trials.
Applications: Lead Compound Identification Dominates
In 2025, the lead compound identification segment is expected to dominate the AI in drug discovery market. Lead compound identification is a critical phase in the drug discovery process, guiding which compounds advance to lead optimization and, eventually, clinical candidate development. AI technology accelerates this process by enabling the rapid screening of large chemical libraries, reducing both the time and costs associated with drug development.
Therapeutic Area: Focus on Oncology
Oncology is projected to hold the largest market share in the AI drug discovery market by 2025. Cancer remains a significant global health challenge, with pharmaceutical companies prioritizing oncology for drug discovery initiatives. The high incidence of cancer, along with substantial funding for oncology research, supports the adoption of AI in developing targeted cancer therapies. Additionally, numerous collaborations between pharmaceutical and AI companies in oncology drug development further enhance this segment's market share.
End User: Pharmaceutical & Biotechnological Companies Leading the Way
Pharmaceutical and biopharmaceutical companies are increasingly adopting AI to identify new drug candidates. These companies focus on minimizing operational costs and accelerating the introduction of innovative treatments to the market. The growing burden of chronic and infectious diseases puts pressure on pharmaceutical firms to develop new drugs quickly. By integrating AI into drug research, these companies can enhance drug discovery processes, reducing the time and costs required to bring new treatments to patients.
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Regional Insights: Asia-Pacific Leads Market Growth
Asia-Pacific is expected to be the fastest-growing regional market for AI in drug discovery. Factors such as developing AI and pharmaceutical research infrastructure in China, India, Singapore, and South Korea, increased funding for cancer research, and rising investments in AI contribute to this growth. Additionally, a surge in AI-based drug discovery startups in the region is further boosting market expansion.
Key Market Players
The competitive landscape of the AI in drug discovery market includes several prominent players:
Microsoft Corporation (U.S.)
Exscientia plc (U.K.)
NVIDIA Corporation (U.S.)
Schrödinger, LLC (U.S.)
Atomwise, Inc. (U.S.)
BenevolentAI Limited (U.K.)
Deep Genomics Incorporated (Canada)
InSilico Medicine (U.S.)
Cloud Pharmaceuticals, Inc. (U.S.)
Standigm Inc. (South Korea)
These companies are focused on developing advanced AI technologies and solutions for drug discovery, engaging in partnerships, and securing investments to enhance their market presence.
Scope of the AI in Drug Discovery Market
By Offering:
Software
Services
By Deployment Mode:
On-premises
Cloud & Web-Based Mode
By Application:
Target Discovery & Validation
Lead Compound Identification
De Novo Design and Drug Optimization
Preclinical & Clinical Testing
By Therapeutic Area:
Oncology
Neurodegenerative Diseases
Cardiovascular Diseases
Metabolic Diseases
Other Therapeutic Areas (including infectious and rare diseases)
By End User:
Pharmaceutical & Biopharmaceutical Companies
Contract Research Organizations (CROs)
Academic & Research Institutes
By Geography:
North America: U.S., Canada
Europe: Germany, U.K., France, Italy, Spain, Rest of Europe
Asia-Pacific: China, Japan, India, Rest of APAC
Latin America: Brazil, Mexico, Rest of Latin America
Middle East & Africa
The adoption of AI in drug discovery is transforming the pharmaceutical industry, offering new possibilities for developing advanced therapies to address the growing burden of chronic and infectious diseases. With continuous advancements and investments in AI technologies, the market for AI in drug discovery is poised for significant growth in the coming years.
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