AI Investments Transforming Pharma & MedTech Landscape 2025

Artificial intelligence is catalyzing pharmaceutical innovation, and private equity has concentrated around this convergence. According to Expert Market Research estimations, the global artificial intelligence (AI) in precision medicine market is expected to grow at a CAGR of 35.60% during the forecast period of 2025-2034, with the values likely to rise from to USD 34.26 billion by 2034. This exceptional growth is multifactorial, with enormous capital deployment, strategic acquisitions, and technological breakthroughs transforming the existing paradigms of drug development. 

The private sector appears to have recognized that AI-pharma ventures might be able to open longstanding industry gridlocks such as the prohibitive costs of research and development (more than USD 2.6 billion per drug), the 90% clinical trial failure for cancer medications, and the looming peril of a “patent cliff” that threatens to consume USD 406 billion in revenue. With AI, drug development timelines might go from more than 5 years to less than 18 months while also ensuring higher clinical trial success rates (almost double). Therefore, AI has become the next frontier of private equity.

Confidence Rides on Clinical Validation Achievements

Insilico Medicine’s first completely AI-discovered drug, INS018_055 for idiopathic pulmonary fibrosis, has entered Phase 2 trials, giving proof of AI’s ability to create drug candidates that are clinically viable. This event has greatly strengthened investor confidence in the practicality of AI-drug platforms. Concurrently, Atomwise has come up with landmark 318-target study methodically presenting evidence that its AtomNet platform adeptly identified new hits for 235 targets, making AI an excellent alternative to high-throughput screening.

Strategic Partnerships Enable Vertical Integration Across Key Leaders

Industry titans are expanding their AI-ecosystems with partnerships with new but vital AI ventures:

AstraZeneca, for instance, in June 2024, expanded the capabilities of their partnership with BenevolentAI with a novel AI driven drug discovery platform, intended for treating heart failure more effectively. The collaboration underpins the industry’s transition towards embedded-AI capabilities. 

In January 2025, Johnson and Johnson acquired Intra-Cellular Therapies (ITCI) for USD 14.6 billion to dominate the neuroscience landscape. The focus of the deal is Caplyta, a schizophrenia and bipolar depression drug expected to hit USD 5 billion in sale, the sales expectation being contingent on the drug’s approval for treating major depression. J&J will utilize AI-optimized commercialization for targeted promotion, real-world evidence generation, and patient adherence tools. This has strengthened J&J CNS Portfolio which include Invega and Spravato, reducing patient losses and also helps its ambition of global leadership in spite of the short-term EPS dilution. 

RGLS8429 is the main focus of the Novartis-Regulus deal, with key dates approaching. The deal is expected to be finalized by April 30, 2025, with the tender offer starting on May 27, 2025, and ending on June 24, 2025. The transaction is expected to close in the second half of 2025. RGLS8429 is an AI-designed oligonucleotide aimed at treating polycystic kidney disease. Clinical-stage assets like this, developed using AI, are especially valuable.

Merck KGAa’s acquisition of SpringWorks in April 2025 comes with Ogsiveo (nirogacestat) which is an AI-accelerated therapy for desmoid tumors. Oncology is the top therapeutic focus due to its overwhelming clinical trial failure rate.

2025’s Landmark Investment Rounds Exemplifying the Private Equity Funding Surge

Grin Therapeutics came out on the top with a USD 140 million Series D (May 27, 2025), co-led by Angelini Pharma and Blackstone Life Sciences to further treatments for neurodevelopmental disorders by leveraging AI-based drug design. The use of artificial intelligence in drug discovery has enabled Grin Therapeutics to advance more precise and efficient treatments, marking a major milestone for both the company and the broader field of neurodevelopmental disorder therapies.

Syndeio Biosciences came on to the scene with USD 90 million (May 27, 2025) for developing synaptic repair treatments using AI. It has drawn strategic investments from AbbVie and Eli Lilly to support its depression and Alzheimer’s pipeline.

Haya Therapeutics closed a USD 65 million Series A (May 8, 2025) with Eli Lilly’s participation. It wasted no time deploying funds for AI-designed RNA-Targeting therapeutics for heart failure and obesity. By applying cutting-edge AI technologies, Haya Therapeutics aims to identify novel RNA targets that can be leveraged to treat complex metabolic and cardiovascular diseases. The focus on RNA-based therapies represents an innovative approach to addressing major health challenges and could lead to breakthrough treatments in these areas.

Also, BPGBio was named the ‘2024 Biotech AI Company of the Year’ as it received substantial funding to further develop its NAi Interrogative Biology Platform (November 19, 2024), utilizing the supercomputing power of Oak Ridge National Laboratory for spotting targets. The platform harnesses the supercomputing power of Oak Ridge National Laboratory, enabling BPGBio to identify novel therapeutic targets with unprecedented precision. This platform combines cutting-edge computational biology with AI to uncover new opportunities for drug discovery, making BPGBio a standout in the biotech AI space and highlighting the growing impact of supercomputing in biotech research.

Regulatory and Operational Innovations Catalyze the Pharma-AI Transformation

The FDA approved 950 AI and ML enabled medical devices until August 2024, paving way for AI-based pharma products. However, the regulatory uncertainty that has emerged out of the Loper-Bright V. Raimondo has impacted AI validation requirements. Before this case, courts usually deferred to federal agencies like the EEOC or FTC when it came to rules on things like AI fairness. That’s no longer automatic. Now, unless Congress passes clear laws, those agencies' guidelines don’t carry legal weight. This means companies can't rely on federal guidance to justify their use of AI. At the same time, pharma companies are pushing ahead. For instance, Tempus AI has released generative AI capabilities for its Tempus One assistant, improving clinical trial patient matching and data analysis, with the aim to reduce trial recruitment timelines which currently delay 85% of clinical trials. Organizations now have to defend AI fairness independently since Courts no longer defer to agencies. 

PathAI is working with the biggest pharma players to deploy AI pathology models that are twice as good at biomarker identification in cancer drug trials, tackling a key reason why oncology trials fail. 

AI-Pharma Investment Thesis Has Solidified

The investment case for AI in pharma has moved from theory to reality. Clinical progress, FDA-backed validation, and major financial backing have cemented AI’s role in reshaping drug development. As regulatory environments shift, smart investors are placing scientists with regulatory expertise inside portfolio companies to stay ahead. Generative AI, now recognized by the FDA for data curation, is drawing special attention heading into 2026. Asia-Pacific—especially China—is catching up fast, challenging North America’s lead. The urgency isn’t just about innovation; it’s about survival. Patent expirations are threatening billions in revenue, and chronic disease rates keep rising. AI isn’t just a tool—it's becoming the foundation of how the next generation of pharmaceutical value will be built.

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