Big Tech Pile-on
Both domestic and global information technology (IT) giants are now joining pharmaceutical and biotech companies in utilizing artificial intelligence (AI) for drug development. Some AI drug development firms are currently in the process of going public through initial public offerings (IPOs).
According to sources in the industry on July 20, not only domestic IT giants such as LG and Kakao but also global tech companies like NVIDIA are participating in the competitive AI drug development market.
LG recently showcased its ambitious vision for AI-powered drug development, leveraging its colossal AI platform called EXAONE 2.0 during the LG AI Talk Concert 2023 held on July 19. LG AI researcher Han Se-hee said, “Using EXAONE Discovery can significantly reduce the number of synthesis trials from over 10,000 to a few dozen and shorten the research and development time from 40 months to 5 months.” Meanwhile, Kakao has been actively exploring opportunities in AI-driven healthcare since 2021 through its subsidiary KakaoBrain. The company strategically invested in the AI drug development company Galaxis and its in-house AI drug research team unveiled the protein structure prediction framework Solvent on July 11.
In the United States, global tech giants are actively investing in AI drug development using their advanced AI technologies. NVIDIA recently made a US$50 million (63.9 billion won) investment in the AI drug development firm Recursion. Following suit, AI drug development company Causaly successfully raised US$60 million in investment from ICONIQ Growth and other partners. Companies like Google DeepMind and Meta are also advancing their AI-based protein structure prediction programs.
As investment flows into the AI drug development sector, the value of AI drug development firms is on the rise. PharosiBio, an AI drug development firm conducting clinical pipeline development through AI platforms, experienced a highly successful IPO with a whopping 851.2 billion won in application deposits from individual investors by July 18. The competition ratio for the IPO was 347.4 to 1, and the company is set to debut on the KOSDAQ on July 27. Oncocross has also initiated the technical evaluation process for its special listing since last month. Building on its previous success in passing the technical evaluation in 2021, the company aims to challenge an IPO with a focus on AI technology for the first time.
As the AI drug development field is gaining attention as a new growth driver for the pharmaceutical and biotech industry in the post-pandemic era, the related market is rapidly growing. According to MarketsandMarkets, the global AI drug development market is expected to grow at an annual rate of 45.7% from US$609.8 million in 2022 to US$4.035 billion in 2027. Korea Pharmaceutical and Bio-Pharma Manufacturers Association said that 52 companies are currently engaged in a total of 88 collaborative AI drug development projects in the country. As of May this year, 15 AI drug development companies have built a pipeline of 71 drug development candidates, 26 pre-clinical stage candidates, and 7 clinical stage candidates, totaling 104.
In the face of global competition in AI-driven drug development investments, industry insiders assert that strategic investments by South Korea’s K-Bio firms are crucial. At the meeting on July 19, the AI Drug Development Council predicts that the K-MELLODDY Project, an acceleration initiative based on joint learning for AI drug development promoted through public-private cooperation, will present a significant opportunity. Experts also highlight the need for larger-scale projects that integrate AI technologies into various stages of drug development, from discovery to pre-clinical and clinical evaluations.
Kim Yi-rang, chairman of the council, said, “The entry of large companies into the AI drug development market is a very desirable phenomenon. Government policy support that can attract private investments should be provided proactively amid intense competition among countries in AI drug development.”