From Banks to Pharma: Is Drug Discovery the Next Trillion-Dollar Tech Frontier?

Here’s the thing: every time there’s a major technological breakthrough—usually sparked by some new piece of hardware—it triggers a whole new layer of software, shaking up industries that were barely digital before. This cycle has been playing out since some folks started printing transistors out of sand!

Mainframes brought enterprise systems. Personal computers gave us productivity tools. Connectivity infrastructure unleashed the internet. You know the story—it’s the same one tech blogs have been repeating for years. And then, about 15 years ago, came the smartphones: the last big hardware revolution that unlocked a massive wave of new software innovation.

Suddenly, GPUs fueled the rise of mobile free-to-play gaming. GPS became the backbone of the gig economy, powering ride-hailing and deliveries. Touchscreens revolutionized how we interact with devices, enabling everything from photo editing apps to social media platforms like Instagram and TikTok to flourish. 4 and 5G transformed how we consume media, making streaming music and movies as seamless as a tap, with platforms like Spotify, Netflix, and YouTube redefining entertainment. Over the past decade and a half, smartphones have helped create trillions of dollars in market cap worldwide.

But if we’re picking the absolute winner of the mobile era, it has to be fintech! OMG, we’re talking trillions of dollars in market cap created from scratch and everywhere in the world—in just what, 10 years?

It’s always easier to call it in hindsight, but come on—banking was an obvious sitting duck for tech to disrupt! Massive, profitable companies with significant barriers to entry thanks to their physical distribution—branches on every corner, bank managers guarding the gates, and cold, hard cash circulating as paper money.

Smartphones obliterated all of that. Instead of a branch on every corner, we had a branch in everyone’s pocket. Opening accounts, signing up for financial products, asking questions—everything went digital. And with the rise of the consumer internet, credit cards became increasingly popular payment methods. After all, without them, it was a lot harder to catch an Uber or subscribe to Netflix, and this shift helped digitize the flow of money. Add it all up, and here we are, in a world full of NuBanks, Revoluts, Chimes, Robinhoods, and countless others—in every geography and in every segment you find an amazing fintech company.

But that’s all in the past, and the fintech story isn’t going to repeat itself. So, the real question is: where’s it going to rhyme next?

There are plenty of guesses, but one of the most fascinating to me is the pharmaceutical industry.

Just like banks a decade ago, big pharma is made up of companies that have been around for decades and are insanely profitable. Take a look at the market caps of the top players, and you’ll notice they’re comparable to the banking sector. And just like banks relied on the same old competencies and processes to keep things running, pharma companies are doing much of the same.

The business model for pharma is relatively straightforward. They pour billions into R&D, hunting for new drugs to tackle previously untreatable diseases. After many (and I mean many) cycles of trial and error (nothing more empirical, right, Francis Bacon?), they eventually stumble upon something valuable.

From there, they leverage their distribution capabilities and regulatory expertise (did someone say lobby? Not me, of course) to rake in massive profits from these drugs during the decades-long patent period before they expire. Simple, but oh so lucrative.

And with that, we’ve got some of the biggest empires built over the last century—and, to be fair, companies that have contributed massively to the evolution of modern humanity. Let’s be real: without these guys, we’d probably still be doing happy hours over Zoom and washing food packaging as it came in from the grocery store!

But pharma has a significant vulnerability: they’re highly inefficient when it comes to resource productivity. The entire process of getting a drug to the shelf at your local pharmacy costs over $1.5 billion, yet only about 20% of that capital is actually spent on testing and approving the drugs themselves.

The other 80% breaks down like this: 30% goes to funding PhDs mixing test tubes, trying to find molecules that hit a drug target (yes, I know it’s way more complex than that—don’t come for me, specialists, it’s just to keep things flowing!). The remaining 50%? Straight into the trash. These are failed clinical trials that lead nowhere (again, apologies for the oversimplification, experts).

And this is where all the AI magic happening in the world comes into play (took long enough to bring up AI, right?).

At least two major shifts are underway: first, we now have insanely powerful supercomputers capable of crunching massive datasets—something we couldn’t even dream of five years ago. Just look at what happened to Nvidia’s market cap after the Tensor Cores hit the scene. Second, the Transformer architecture is a game-changer—not just for brainstorming marketing campaigns on ChatGPT, but for everything, including designing molecules. It’s no surprise that Google’s AlphaFold is one of its most exciting projects. Well-deserved Nobel Prize in Chemistry this year for the people behind it!

What’s happening, in essence, is that we’re embedding the rules of chemistry, physics, and biology—things we’ve studied for hundreds of years—into computers, much like we did with math decades ago. And just like no one questions that computers are way better at crunching numbers than humans, it won’t be long before they become indispensable for suggesting molecules and finding the best fits with drug targets. Sure, we’ll still need experimental validation and human expertise, but AI is already showing it can speed up and supercharge processes that used to be painfully manual.

As a result, we’re likely to see drug development become not only less expensive but also much faster. And here’s where another crucial part of the mechanics comes into play: since patents start ticking from the moment a drug is registered—essentially at the beginning of the process—speeding through the approval stages effectively increases the net time a company can monetize the patent.

Adding an extra 2-3 years to the patent’s lifespan during the peak distribution and commercialization phase can translate into massive gains. Imagine Novo Nordisk being able to sell Ozempic without generic competition for more 5 years instead of 2 or 3. That kind of time extension isn’t just valuable—it’s a game-changer.

So, with lower costs from a more efficient and optimized process, and higher revenues from shorter time-to-market, the already sky-high profitability of the pharmaceutical industry—26% profit margin—could climb even higher.

Just like digital banks are showing they can be more profitable than their analog counterparts—thanks to their leaner, cheaper-to-operate models—there’s a wide-open lane for tech pharma to pull off the same trick in a space as ripe for disruption as banking was.

Of course, this isn’t an easy challenge and a lot is bound to happen in the coming years. While the comparison to fintechs highlights the potential, disrupting pharma comes with unique challenges—like regulatory hurdles and the inherent complexity of biological systems. But it feels like a pretty solid big_bets , doesn’t it?