AI-Driven Innovations in the Biotech Market: From Drug Discovery to Personalized Medicine by 2025

As of 2025, the global biotech industry is experiencing fundamental changes through integration with artificial intelligence (AI) technology. According to the latest report by McKinsey & Company, the global biotech market size will reach $842 billion by 2025, with the AI-based drug discovery and development sector accounting for $194 billion, or 23% of the total market. Notably, while traditional drug development processes took an average of 10-15 years, new drug development using AI has been reduced to 3-5 years, bringing innovative changes across the industry. These changes are having a broad impact beyond mere technological progress, affecting biotech companies’ business models, investment strategies, and patients’ access to treatment.

Examining the movements of leading companies in the current market, California-based Recursion Pharmaceuticals is conducting 147 programs simultaneously through its AI-based drug discovery platform as of the third quarter of 2025, a 34% increase from the previous year. Exscientia, headquartered in London, secured $1.2 billion in investments in the first half of this year alone, solidifying its leading position in the AI-based drug design field. In Korea, Celltrion and Samsung Biologics are focusing on AI-based biosimilar development and cell line optimization technology, respectively, and with the government’s K-Bio New Deal policy, the Korean biotech market recorded a growth of 18.7% year-on-year, reaching $28.4 billion in 2025.

The most pronounced area of AI and biotech integration is in drug discovery. Traditionally, identifying a new drug candidate required screening over 10,000 compounds on average, but current AI algorithms dramatically shorten this process through molecular structure prediction and protein interaction modeling. Specifically, Generate Biomedicines, headquartered in Massachusetts, announced that its proprietary generative AI platform reduced the design time for new protein therapeutics from 2-3 years to 6 months. As of 2025, the company is valued at $4.7 billion and is considered a representative success story in the AI-based biotech sector.

A closer analysis of market data reveals intriguing patterns in investment trends in the AI biotech sector. According to PwC’s third-quarter 2025 report, AI-related fields account for 41% of global biotech venture capital investments, a significant increase from 28% in 2023. Notably, the average size of Series A investments is $23.4 million, 67% higher than traditional biotech startups. This increase in investment is supported by clinical data showing that the success rate of AI-based drug development is significantly higher at 22-28% compared to 8-12% for traditional methods.

Realization of Personalized Medicine and Precision Medicine

Another key pillar of AI biotech innovation is the field of personalized medicine. The genomic data being collected worldwide is expected to reach approximately 2.3 exabytes by 2025, a 340% increase from 2022. With advancements in AI algorithms capable of processing and analyzing this vast data, the development of treatments tailored to individual patients’ genetic characteristics is becoming a reality. California’s Tempus has reduced the tumor genomic analysis time for cancer patients from 4-6 weeks to 48 hours using its proprietary AI platform, with 78% of major cancer centers in North America utilizing this platform as of 2025.

In the precision medicine field, notable achievements are being made by Amsterdam-based Proscia. The company has increased the accuracy of biopsy results to 96.7% through its AI-based digital pathology platform, reducing pathologists’ diagnostic time by an average of 43%. Particularly in breast and prostate cancer diagnoses, it shows 15% higher accuracy compared to traditional methods, with 124 hospitals in Europe deciding to adopt it in the first half of 2025 alone. These achievements create substantial value beyond mere technological excellence, improving healthcare professionals’ work efficiency and patient treatment outcomes.

In the Korean market, innovation in personalized medicine is also accelerating. Seoul-based Standigm has developed a disease prediction model tailored to Koreans through its AI-based genomic analysis platform, which is being utilized in 17 major university hospitals in Korea as of 2025. This platform achieves a 94.2% accuracy in diabetes prediction reflecting Korean genetic characteristics, 12% higher than Western data-based models. Additionally, the adoption rate of AI by domestic biotech companies surged from 34% in 2023 to 61% in 2025, further expanding the growth potential of the personalized medicine market.

The market size of personalized medicine is also rapidly expanding. According to the latest analysis by Frost & Sullivan, the global precision medicine market is expected to reach $289 billion by 2025, with a compound annual growth rate (CAGR) of 13.8%. Among this, the AI-based diagnostics and treatment sector accounts for $104 billion, or 36% of the total market, showing the fastest growth. Particularly, the Asia-Pacific region’s growth rate is 17.2%, significantly exceeding the global average, with China and Korea leading the region’s growth.

Changes in Market Competition and Investment Strategies

The competitive landscape of the AI biotech market is becoming more complex and diverse in 2025. As the boundaries between traditional pharmaceutical giants and AI startups blur, new forms of collaboration and competition are emerging simultaneously. Roche, headquartered in Basel, Switzerland, invested $1.8 billion in the AI biotech sector in the first half of 2025 alone, an 89% increase from the previous year. Roche is conducting 12 AI-based drug discovery programs simultaneously through its own AI research lab, the ‘Roche Innovation Center,’ with three programs expected to enter Phase 2 clinical trials within 2025.

In the United States, the entry of Big Tech companies into the biotech sector is accelerating. Seattle-based Amazon is expanding its ‘AWS HealthOmics’ platform through its subsidiary Amazon Web Services (AWS), providing cloud-based genomic analysis services to biotech companies. As of 2025, 347 biotech companies are utilizing this platform, a 156% increase from the previous year. Additionally, Mountain View, California-based Google is commercializing its protein structure prediction AI, AlphaFold, through its subsidiary DeepMind, with 142 pharmaceutical companies in 23 countries signing licenses as of the third quarter of 2025.

Changes in investment patterns are also noteworthy. According to data from CB Insights, the number of mega deals (investments over $100 million) in the AI biotech sector reached 47 in 2025, a 62% increase from 29 in 2024. Notably, the average size of Series B and Series C investments increased by 34% and 41%, respectively, to $72 million and $148 million, indicating growing investor confidence in AI biotech. This increase in investment is largely driven by the continuous improvement in clinical success rates of AI-based drug development.

In the Asian market, China and Korea are fiercely competing in the AI biotech sector. Beijing-based XtalPi recorded a market capitalization of $3.2 billion as of 2025, becoming the largest AI biotech company in Asia. The company announced that its quantum physics-based molecular simulation technology improved the success rate of new drug candidates by 2.3 times compared to the existing rate. Meanwhile, Korea’s Syntekabio has built a platform specializing in AI-based antibody drug development, raising 34 billion won through a KOSDAQ listing in the first half of 2025.

Changes in the regulatory environment are also significantly impacting market trends. The U.S. FDA announced the ‘AI/ML-Based Medical Device Action Plan 2.0′ in January 2025, significantly simplifying the approval process for AI-based medical devices. As a result, the commercialization period for AI biotech companies’ products has been reduced by an average of 8 months, significantly lowering market entry barriers. In Europe, the EMA (European Medicines Agency) established a separate approval track for AI-based therapeutics, accelerating the launch of AI biotech products in the European market. The Korean Ministry of Food and Drug Safety also revised the ‘AI Medical Device Approval and Review Guidelines’ in July 2025, actively supporting the commercialization of domestic AI biotech companies’ products.

Looking ahead to the second half of 2025, the AI biotech market is expected to develop in a more segmented and specialized direction. Particularly, the use of AI technology is expected to expand significantly in the development of treatments for rare diseases, prevention and treatment of geriatric diseases, and mental health fields. According to Deloitte’s analysis, the AI biotech market size is predicted to reach $1.24 trillion by 2026, a 47% increase from the current size. In this growth process, technological innovation, along with ethical and regulatory challenges, are emerging as important issues to be addressed simultaneously. Protecting data privacy, ensuring transparency of AI algorithms, and guaranteeing equity in healthcare access remain challenges that the entire industry must address together.

**Disclaimer:** This analysis is based on publicly available information and industry reports. Please conduct additional research and consult with experts before making investment decisions.