The AI drug breakthrough is taking a long time to arrive for reasons that may have little to do with the technology's limits | Fortune

"AI-leveraged drug development has become an $18 billion industry, but companies in the sector are experiencing some hardships. Beyond efforts to convenience investors their drugs are safe and effective, venture capital funding is drying up. Experts say this is due to macroeconomic and regulatory challenges and has less to do with failures from the technology itself. Moonshot hopes of artificial intelligence being used to expedite the development of drugs are coming back down to earth."

"More than $18 billion has flooded into more than 200 biotechnology companies touting AI to expedite development, with 75 drugs or vaccines entering clinical trials. Now, investor confidence-and funding-is starting to waver. In 2021, venture capital investment in AI drug companies reached an apex with more than 40 deals being made worth about $1.8 billion. This year, there have been fewer than 20 deals worth about half of that peak sum, the Financial Times reported, citing data from Pitchbook."

"Some existing companies have struggled in the face of challenges. In May, biotech company Recursion tabled three of its prospective drugs in a cost-cutting effort following a merger with Exscientia, a similar biotech firm, last year. Fortune previously reported that none of Recursion's discovered AI-compounds have reached the market as approved drugs. After a major restructuring in December 2024, biotech company BenevolentAI delisted from the Euronext Amsterdam stock exchange in March before merging with Osaka Holdings."

More than $18 billion has flowed into AI-focused biotechnology, supporting over 200 companies and enabling roughly 75 drugs or vaccines to enter clinical trials. Venture capital peaked in 2021 at about $1.8 billion across more than 40 deals, but current-year deal count and value have fallen to fewer than 20 deals worth roughly half that amount. Macroeconomic and regulatory pressures have weakened investor confidence and reduced funding, while technological failure appears a less significant driver. Several firms have responded with restructuring and cost-cutting: Recursion shelved three prospective drugs after a merger, and BenevolentAI restructured, delisted, and merged with another firm.

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