The AI Revolution in Biotechnology: Paradigm Shift in Drug Development and Diagnostics Market by 2025
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As of November 2025, the biotechnology industry stands at the center of unprecedented change with the rapid advancement of artificial intelligence. The global AI-based drug discovery market is projected to grow from $2.2 billion in 2024 to $18.6 billion by 2030, recording an astonishing compound annual growth rate (CAGR) of 41.8%. This growth is driven by the pharmaceutical industry’s urgent need to overcome the limitations of traditional drug development processes and the maturity of AI technology reaching a critical point. In particular, South Korea has clearly demonstrated its intent to redefine its position in the global biotech competition by announcing an investment of 1.2 trillion won in AI-based new drug development by 2025 through the government-led ‘K-Bio Grand Challenge’ project.
The area where AI is bringing the most innovative changes in the biotech field is drug discovery. Traditionally, developing a new drug took an average of 10-15 years and cost $2.6 billion, but AI-powered drug discovery platforms are reducing this period to 3-5 years. A representative example of this change is DeepMind’s AlphaFold project, based in London, which has predicted and released the structures of over 200 million proteins as of 2025, fundamentally transforming the drug design process for pharmaceutical companies worldwide. In fact, Roche in Switzerland announced that it reduced the development time for Alzheimer’s treatment by 30% using AlphaFold data, and Pfizer in the U.S. is investing $1.5 billion annually in AI-based drug discovery.
Domestic biotech companies are also actively participating in these global trends. South Korea’s Standigm has discovered 12 new drug candidates through its AI-based drug development platform ‘BEST’ as of the first half of 2025, with three entering Phase 1 clinical trials. Notably, Standigm’s idiopathic pulmonary fibrosis treatment showed 40% higher efficacy compared to existing drugs. Additionally, the bio AI startup NeuroQle has established an AI platform specialized in brain disease treatment, securing 45 billion won in Series B funding in 2024, marking the largest investment in the domestic bio AI sector, indicating the growth potential of the Korean biotech market.
Innovation in AI Diagnostic Technology and Market Expansion
Alongside drug development, another innovation AI brings to the biotech field is the advancement of diagnostic technology. As of 2025, the AI-based medical diagnostics market has grown 32% year-over-year to $7.8 billion, with projections to expand to $25.4 billion by 2030. The core drivers of this growth are the widespread adoption of AI in imaging diagnostics and advancements in genetic analysis technology. Verily, a California-based subsidiary of Google, achieved over 90% accuracy with its AI system for diagnosing diabetic retinopathy, currently utilized in over 2,000 medical institutions across 25 countries. This significantly surpasses the existing diagnostic accuracy of 85% by ophthalmologists, demonstrating that AI complements rather than replaces medical professionals to produce better clinical outcomes.
In South Korea, the commercialization of AI diagnostic technology is rapidly progressing. VUNO provides its AI solution ‘VUNO Med-Chest X-ray’ for detecting lung nodules in chest X-ray images to over 200 medical institutions domestically as of the first half of 2025, having received FDA approval for entry into the North American market. Notably, VUNO’s AI diagnostic system recorded a 94% accuracy rate in pneumonia diagnosis during the COVID-19 pandemic, enhancing medical staff efficiency by 30%. Additionally, Lunit has increased mammography interpretation accuracy to 97% with its early breast cancer diagnosis AI ‘Lunit INSIGHT MMG’, used in 40 countries worldwide as of 2024.
AI’s influence is rapidly expanding in the field of genetic analysis as well. Illumina in the U.S. has reduced whole genome sequencing time from 24 hours to 1 hour with its AI-based genomic analysis platform ‘DRAGEN’, considered a game-changer for quickly diagnosing genetic disorders in emergency medical situations. Domestically, Macrogen provides personalized health management solutions through its AI-based genomic analysis service ‘Genie Talk’, surpassing 500,000 cumulative users as of 2025.
Investment Trends and Changes in Market Competition
As AI adoption in the biotech field accelerates, related investments are significantly increasing. Global biotech venture investments reached $34.2 billion in 2024, a 28% increase from the previous year, with AI-related investments accounting for 35% or $12 billion. Notably, big tech companies are actively entering the biotech field. Microsoft invested $500 million in the biotech startup Adagio Therapeutics in early 2025, and Amazon launched the cloud-based AI platform ‘AWS HealthOmics’ for biotech companies through its subsidiary Amazon Web Services (AWS).
This investment expansion is fundamentally changing the competitive landscape of the biotech market. Traditional pharmaceutical companies are actively pursuing M&A and partnerships to secure AI capabilities. Novartis in Switzerland acquired the AI-based drug discovery company Genero for $2.7 billion in 2024, and Bayer in Germany established a ‘Biotech Innovation Fund’ of 1 billion euros annually to collaborate with AI startups. Meanwhile, tech companies with AI expertise are seeking new growth drivers by expanding into the biotech field. NVIDIA launched the AI computing platform ‘BioNeMo’ for life sciences research, with 150 research institutions worldwide utilizing it as of the first half of 2025.
In South Korea, large corporations are actively investing in biotech. Samsung Biologics announced a 500 billion won investment in AI-based biopharmaceutical development by 2025, and LG Chem established the AI drug development subsidiary ‘LG Chem Life Sciences AI’ to foster it as an independent business area. SK Biopharm established an AI research center in Boston, USA, strengthening collaboration with local biotech startups. These moves by large corporations act as catalysts accelerating the growth of the Korean biotech ecosystem.
The regulatory environment is also evolving to support the advancement of AI biotechnology. The U.S. FDA revised its ‘AI/ML-Based Medical Device Approval Guidelines’ in 2024 to streamline approval processes, and the European Medicines Agency (EMA) established a separate review track for AI-based pharmaceuticals. The Korean Ministry of Food and Drug Safety announced the ‘AI Medical Device Approval and Review Guidelines’ in 2025 to support the overseas expansion of domestic AI biotech companies. Notably, South Korea became the first in Asia to introduce an AI-based drug repurposing approval system, allowing clinical trial periods to be reduced by up to 50% when discovering new indications for existing approved drugs using AI.
Market experts have a highly positive outlook on the growth potential of the AI biotech field. According to a recent report by McKinsey, advancements in AI technology are expected to result in annual healthcare cost savings of $100 billion globally by 2030. Additionally, BCG (Boston Consulting Group) projects that AI-based drug development will lead to the release of 50-70 additional innovative new drugs worldwide between 2025 and 2030, representing a scale and speed of innovation previously unattainable by traditional methods.
However, the rapid growth of the AI biotech field also presents several challenges. The most significant issue is the quality and standardization of data. The performance of AI algorithms heavily depends on the quality of training data, and in the case of medical data, securing high-quality data is challenging due to privacy concerns, diversity in data formats, and differences in data collection methods across institutions. In fact, a study published in Nature in 2024 reported that 60% of AI biotech projects experience longer development times than expected due to data quality issues. Additionally, the ‘black box’ nature of AI models raises concerns about explainability among regulators and medical professionals.
Looking ahead to the second half of 2025, the AI biotech field is expected to develop in a more segmented and specialized direction. In particular, AI’s role in personalized medicine is anticipated to expand significantly. Already, Tempus in the U.S. is providing services to over 100,000 patients as of the first half of 2025 through its AI platform that comprehensively analyzes individual genetic, clinical, and lifestyle data to suggest optimal treatment methods. In South Korea, Seoul National University Bundang Hospital and Asan Medical Center in Seoul are establishing AI-based precision medicine centers to accelerate the commercialization of personalized treatment. This change is evaluated as a revolutionary shift that transforms the medical paradigm itself into patient-centered predictive and preventive healthcare, beyond mere technological advancement.
In conclusion, as of 2025, the convergence of AI and biotechnology is no longer a future possibility but a current reality. The innovative reduction in drug development time, dramatic improvement in diagnostic accuracy, and realization of personalized medicine are reshaping the entire value chain of the healthcare industry. The growth of this field is expected to accelerate further over the next five years, and South Korea, in particular, is likely to occupy a significant position in the global AI biotech competition, supported by proactive government policies and excellent IT infrastructure. However, systematically addressing challenges such as data quality, regulatory frameworks, and ethical considerations will be key to sustainable growth.
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**Disclaimer**: This article is an industry analysis report based on publicly available information. It is not advice for investment decisions, nor is it a recommendation to invest in the mentioned companies or technologies. All investment decisions should be made at the individual’s discretion, and consulting with a professional is advised.
