The Small Molecule Renaissance- a comeback of proven platforms and perfected protocols

For over a century, small molecules have served as the foundational pillars of modern medicine, pioneering breakthroughs that have profoundly improved public health. The history of this therapeutic class is a testament of continuous innovation, from the serendipitous discovery of early drugs like penicillin to the current state of rational drug design that gave rise to targeted therapies. The enduring success of small molecules is rooted in their inherent properties, including their ability to be administered orally, which offers significant convenience over injectable biologics. Their compact size and modular structure, allow them to easily cross biological barriers and penetrate cell membranes to modulate intracellular targets, such as enzymes and receptors. 

However, the late 20th century witnessed a significant market pivot driven by a growing perception of inefficiency within the traditional small molecule R&D model. The average cost to develop a single new drug had escalated dramatically over several decades. Estimates show the average cost of development rising from $54 million in 1976 to an estimated $802 million by 2000 and crossing a billion within the next decade. This rapid and sustained increase in R&D costs, coupled with protracted development cycles that could span over a decade, created a narrative of high risk and diminishing returns. Faced with this challenging economic and logistical landscape, the biopharmaceutical industry began to seek new avenues for innovation.

 The advent of the biotechnology revolution provided a compelling alternative. Landmark discoveries in genetic engineering paved the way for the development of biologics, a new class of drugs that offered a different approach to therapeutic intervention. The development of monoclonal antibodies (mAbs) in the 1980s was a major turning point, leading to highly specific treatments for complex diseases like autoimmune disorders and cancers. Biologics were lauded for their targeted mechanisms and their ability to address previously unsolvable biological complex targets that small molecules could not easily reach. The market responded by reallocating resources; the share of the global pharma market held by biologics grew at a rate three times faster than small molecules. This shift was also reflected in R&D budgets, where the small molecule share declined by 30% in the previous decade, with a corresponding growth in biologics R&D. The rise of biologics was not merely a story of technological advancement, but in my view, a direct, market-driven response to the economic and logistical challenges that plagued traditional small molecule development. The industry, faced with a seemingly broken, expensive, and protracted R&D model for small molecules, logically embraced a new seemingly more efficient modality.  

Despite this pronounced market pivot, it is essential to recognize that small molecules were never fully supplanted. The data shows that in 2023, small molecule drugs still comprised a significant 60% of total pharmaceutical sales. Small molecules remain the backbone of the pharmaceutical industry due to their affordability, established role in treating widespread chronic conditions and their proven track record of consistent results. The industry’s shift was not a complete substitution but a redistribution of focus, particularly in R&D budgets and for specific therapeutic areas. The narrative of resurgence is therefore about re-establishing balance and investment, not about a return to an undisputed leading modality.

A Turning Point in Perception and R&D

The COVID-19 pandemic served as a pivotal moment in the biopharmaceutical industry, simultaneously elevating the public profile of biologics while also exposing critical vulnerabilities and forcing a strategic re-evaluation of small molecule R&D. The global response to the pandemic placed a spotlight on the rapid development of vaccines, which created a new benchmark for speed and innovation. The public perception and investors expectation suddenly changed to this timeline as the gold standard for cutting-edge science. However, the rapid turnaround of these vaccines was not a spontaneous breakthrough but a culmination of unprecedented funding, global collaboration, and decades of prior research on platform technologies.

While vaccines garnered most of the attention, small molecules played an equally critical role in the pandemic response. Small molecule antivirals like remdesivir, molnupiravir, and Paxlovid were granted emergency use authorization. This demonstrated that small molecules remained a vital and rapid tool in a time of global crisis, capable of providing effective and accessible treatments.

The pandemic also acted as a forcing function for modernization by exposing long-standing fragilities in the global small molecule supply chain. Even before the pandemic, the industry faced shortages of key small molecule drug substances and drug products, particularly those whose manufacturing capacity was concentrated in Asia. The shutdowns and limited operations of facilities in China prompted companies to look for alternatives or backups in other parts of the world. This vulnerability, however, became a catalyst for positive discussions on reshoring of manufacturing processes. Several pharmaceutical companies have committed significant investment toward building in-house manufacturing capabilities. However, whether they will endure such huge investments and long lead times or instead pursue alternative contingency plans while continuing to rely on established supply chains in China and India remains to be seen.

The current market momentum for small molecules is therefore built and rightfully should be on the lessons of the pandemic, transforming a vulnerability into a long-term strength. The small molecule resurgence is a direct result of its ability to leverage new technologies and strategic optimizations to meet this high bar set by biologics during the pandemic.

 The Evidence

The narrative of a small molecule renaissance is not merely anecdotal; it is substantiated by a growing body of statistical evidence and driven by fundamental technological and strategic shifts. A clear indicator of this comeback is the rising proportion of small molecules among new drug approvals. Data from the FDA shows that the percentage of new chemical entities approved that were small molecules has progressively increased, from 57% in 2022 to 62% in 2023, reaching a significant 64% in 2024. This trend is robust, bringing the five-year average for approvals up to 64.6%. (Read reference below for the full information). This data directly contradicts the idea that small molecules are being shelved, instead showing a steady and increasing impact on pharmaceutical discoveries. This return of confidence is also reflected in the financial landscape. While small molecule drug funding was reported to have dropped by 70% since 2021; In 2024, venture capital funding for small molecule ventures raised $8.1 billion. Such positive data should be widely disseminated to reinforce scientific and investor confidence, ensuring continued funding and momentum for this modality, much like during its peak.

The resurgence is not a broad, untargeted phenomenon but a strategic shift by the industry toward high-value, technology-enabled small molecules. Market analysis shows that while the overall small molecule market is growing, the fastest-growing segments are oncology and the rare/orphan segment. This demonstrates a strategic pivot by investors and companies to apply cutting-edge technology to develop specialized small molecules that can command a premium price and address areas of high unmet need.

The return of this therapeutic class is driven by a union of factors. First, the increasing prevalence of chronic diseases like cancer, diabetes, and cardiovascular ailments fuels a constant demand for new and effective therapeutic solutions. Small molecules, with their proven track record, versatility, and ease of oral administration, are uniquely positioned to address this immense market need.

Second, the resurgence is critically dependent on technological advancements, particularly the integration of Artificial Intelligence (AI) and in-silico methods. These technologies are revolutionizing the discovery process, enhancing its efficiency, speed, and accuracy. For example, AI-driven predictive modeling can analyze large datasets to forecast drug-target interactions, toxicity, and efficacy, significantly reducing the time and cost associated with R&D.

Third, small molecules are expanding their functional and therapeutic range. Historically, certain targets, such as protein-protein interactions, were considered inaccessible to small molecules. However, new chemical modalities, including targeted covalent inhibitors (TCIs) and RNA-targeting small molecules (RTSMs), are successfully addressing these difficult targets.

The resurgence of small molecules, while robust, is not without its challenges. The most significant headwind comes from legislative and regulatory changes, particularly in the United States. This law, enacted in 2022, creates a pronounced disincentive for small molecule R&D by establishing a differential timeline for Medicare price negotiation of 9 years post-approval, compared to 13 years for biologics. This substantial reduction in expected revenues may disincentivize companies from making the long-term investments required for small molecule development.

This impact is largely US-centric, and this could lead to a strategic reorientation of small molecule R&D. While North America currently dominates the small molecule CDMO market and the drug discovery outsourcing market, these unfavorable laws might compel companies to shift R&D investments to other regions with more favorable environments.

 Accelerating the Path to Market

The unprecedented speed of COVID-19 vaccine development has forever changed the industry's perception of drug development timelines. This shift places new pressure on small molecule development to become faster and more efficient, a goal that can only be achieved through a radical modernization of the entire R&D and clinical process.

At the heart of this transformation is the central role of Artificial Intelligence (AI), which is uniquely suited to accelerate small molecule development. AI's capabilities are not merely an accessory; they are a fundamental technological enabler of the small molecule renaissance. The modular and well-characterized nature of small molecules makes them ideal for AI-driven predictive modeling. The last decade saw a surge in AI implementation in early discovery phase. Now, the industry is focused on modernizing the entire value chain, from clinical trials to process development. Digitalization is also streamlining processes, from the use of electronic notebooks and batch records to a blockchain created execution to preserve data integrity.  CRDMOs who can harvest this innovation and apply in real time tends to benefit the most.

LAXAI Life Sciences is pioneering the integration of Artificial Intelligence into small molecule process development, an area traditionally marked by complexity and long timelines. By leveraging AI-driven processes which integrates modeling, simulation, and Design of Experiments (DoE), we’re building robust, cost-efficient chemical processes that reduce development timelines by over 50%, enhance safety, and ensure consistent quality control. Our approach combines scientific rigor with digital innovation to deliver scalable solutions for global partners. We are harnessing the power of both generative and predictive AI models to define unit operations that create a dynamic design space, one that continuously leads to an optimized operating range (sweet spot) through built-in feedback loop. 

Looking ahead, the future of small molecules is defined by their ability to meet the industry's new expectation for speed and efficiency. The adoption of AI, modernized clinical trial practices, and integrated development partnerships are transforming the entire value chain. These tools are enabling a new paradigm where small molecules can be discovered, developed, and brought to market with unprecedented agility. As precision becomes paramount, ADCs and Radiopharmaceuticals are also poised for accelerated demand driven by their targeted delivery and therapeutic specificity- mainly in oncology. The future of medicine is not about one modality replacing another but about a multimodal approach where small molecules, enhanced by technology and strategic optimization, remain a critical and evolving force in addressing global health needs.