Tech Providers or Biotechs: The Quest to Find an Optimal Business Model Continues for AI Drug Discovery Companies…
The AI drug discovery industry has already gathered momentum with AI start-ups having signed more than 200 deals with 50+ pharma companies over the last few years, and these are just the disclosed deals. Few top companies like InSilico Medicine and Cyclica claim to have over 100 collaborations each with Academia and Industries. With billions of dollars pouring-in, it is likely to gain further impetus with the industry approaching maturity in the next few years from its formative stage.
A conundrum that has been bothering these groundbreaking start-ups is the business model.
AI companies have been shuffling with their partnership models, having to display high flexibility to tend to the specific requirements of the partners. The roles could range from utilizing AI to develop internal pipelines as a biotech or providing AI as software or AI-driven services like a CRO.
AI-driven biotechs
In this model, AI companies’ model is analogous to that of a typical biotech, either repurposing old drugs in new indications or designing new drugs and fill their pipelines. Such companies usually aim to utilize AI and create assets with lower costs and faster development timelines. These assets could be then partnered or licensed out to pharma companies having clinical development capabilities to generate revenue.
Such AI-driven companies would face the same challenges just as a regular biotech pharma, needing a strong internal team with robust therapeutic knowledge, having an experimental R&D infrastructure or capabilities across the spectrum to outsource work, commercial or regulatory knowledge, etc.
These biotech’s, while powered by AI for better success, will still have to compete for attention by the pharma. These companies will have to attract an investor community with an appetite for high-risk opportunities and long incubation periods. A few AI-powered biotechs like BERG or AI therapeutics are well funded and have a few assets in clinical development.
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