1. The segment of pharmaceutical AI continues consolidation with the increasing number of later stage mega-rounds, including those of Insitro ($143M), Recursion Pharmaceuticals ($239M), XtalPi ($319M) and others. The AI startups pack is clearly differentiating into the leaders, who developed substantial resources, financial leverage, and technological advantage, and others lagging behind -- companies with less resources or less mature technology and scientific assets. The latter are usually focused on narrow therapeutic or technological niches, and are following service-oriented business models.
2. Pharmaceutical AI sector is “heating up”, and becomes a lucrative area for specialized biotech investors as well as investor organizations just entering the pharma space with a goal of including high-risk/high-return companies in their investment portfolios. This is backed by several observations, including an overall increasing investment activity in this sector in 2020, the increasing rush among leading pharma and contract research organizations (CROs) to compete for partnerships with AI-driven companies, and the increasing amount of proof-of-concept breakthroughs, confirming that AI technology has achieved substantial maturity to be able to bring tangible value for drug discovery -- far beyond a simple optimization gain.
3. Big pharma and contract research organizations increasingly compete for AI partnerships, and continue building in-house AI workflows -- driven by rapidly emerging evidence of the AI tech feasibility and innovation potential. A number of highly notable proof-of-concept results has been announced in 2019-2020.
4. COVID-19 pandemics appears to be a positive catalyst for the acceleration of the AI adoption by the pharmaceutical organizations. This is primarily stipulated by the necessity to rapidly process vast amounts of data, and come up with innovations under strict deadlines. Therefore, this urgency pushed companies and investors into more opportunistic projects than ever before.