Moving beyond the binary: how the convergence of small and large molecules is reshaping pharmaceutical R&D

Pharmaceutical research and development (R&D) stands at a pivotal inflection point, characterized by a dynamic shift away from the traditional dichotomy of small versus large molecules. While small molecules demonstrated a notable resurgence in recent years, accounting for 65% of novel drug approvals by the U.S. Food and Drug Administration (FDA) in 2025 – a significant increase from 56% in both 2023 and 2024 – biologics continue their rapid market ascent. Projections indicate that biologic sales, growing three times faster than their chemical counterparts, are poised to surpass small molecule sales by 2027. This seeming paradox underscores a profound recalibration within the industry, where the "either/or" question of modality is giving way to a complex, hybrid-driven landscape.

The Evolving Pharmaceutical Market Landscape

The global pharmaceutical market has undergone substantial transformation. In 2018, the market was an estimated $828 billion, with small molecules comprising 69% of sales and biologics 31%. By 2023, the market had expanded to $1.344 trillion, with small molecules accounting for 58% and biologics 42%. The accelerated growth of biologics, driven by their increasing therapeutic utility and market penetration, highlights a significant shift in investment and focus. Despite this, the sustained approval rate for small molecules, particularly in early 2025, suggests a renewed vitality, fueled by technological advancements and strategic innovation rather than a decline in relevance.

This evolution is fundamentally altering how drug discovery is approached. The industry is moving from a broad-spectrum, empirical approach to a highly precise, data-driven methodology. Advances in genomics, target biology, and artificial intelligence (AI) are empowering researchers to identify and address diseases with unprecedented specificity. As Andreas Matern, vice president of professional services at Elsevier, noted, "It’s no longer trying to shotgun blast a whole bunch of things, but instead trying to sniper and be really tight in what we’re attacking." This paradigm shift emphasizes a deeper understanding of biological targets, genetic predispositions, and patient populations before committing to a particular therapeutic modality.

The Ascendancy of Data and AI in Drug Discovery

The integration of artificial intelligence is rapidly compressing R&D timelines, generating novel hypotheses, and informing critical modality selection decisions. Sophisticated AI tools such as AlphaFold for protein structure prediction, generative chemistry platforms for novel compound design, and large language models for synthesizing vast amounts of scientific literature are being layered onto proprietary and public datasets. This computational power unlocks new insights into disease mechanisms and potential therapeutic interventions.

However, the promise of AI extends beyond mere efficiency. Daphne Koller, CEO and founder of Insitro, articulated this crucial point at the Danaher Summit: "Most programs fail in the clinic because of the early stages of the decision-making process. The focus of the next few years needs to be on increasing the success rate (the yield), rather than just efficiency. AI must help us select the right therapeutic hypotheses and the right patient populations from the start." This emphasizes AI’s role in improving the probability of clinical success by optimizing early-stage decision-making, moving beyond brute-force screening towards intelligent, predictive design.

Defining the Modalities: Small, Large, and Hybrid

Moving beyond the binary: how the convergence of small and large molecules is reshaping pharmaceutical R&D

To understand the convergence, it is essential to define the traditional modalities:

Small Molecules: These are chemically synthesized compounds, typically weighing less than 900 Daltons. Their compact size allows them to readily cross cell membranes, enabling access to intracellular targets. Historically, small molecules have dominated the pharmaceutical landscape due to their oral bioavailability, stability at room temperature, scalability of manufacturing, well-established regulatory pathways, and lower cost of goods. They remain the foundation for many chronic and acute treatments.
Large Molecules (Biologics): Derived from living organisms, biologics encompass a diverse range of complex structures, including proteins, nucleic acids, and whole cells. With molecular weights exceeding 1,000 Daltons, these medicines generally cannot easily penetrate cell membranes, typically requiring injection or infusion. Examples include monoclonal antibodies (mAbs), antibody-drug conjugates (ADCs), messenger RNA (mRNA) therapies, CAR-T cell therapies, and engineered peptides like GLP-1 agonists. Biologics are characterized by high target specificity, which often translates to reduced off-target toxicity. However, their complexity poses challenges in manufacturing, storage (often requiring cold chains), and administration.

The selection of a therapeutic modality is primarily dictated by the target biology. Key considerations include the desired specificity, the patient population, and whether the target is intracellular or extracellular. Advanced data platforms are becoming indispensable in this decision-making process, aggregating published research, clinical trial data, and pipeline intelligence to provide comprehensive insights. Matern reiterated this, stating, "The choice of modality — whether I use a small molecule or any number of the large molecules — really comes down to understanding your target, understanding the biology."

Historically, small molecules were limited to targeting proteins with well-defined binding pockets, leaving an estimated 80% of the human proteome "undruggable." This limitation spurred the development of biologics, which could engage targets inaccessible to traditional small molecules. However, the emerging landscape increasingly blurs this distinction. A growing class of hybrid and intermediate modalities, such as ADCs, proteolysis-targeting chimeras (PROTACs), and RNA-small molecule conjugates, deliberately combine the advantageous properties of both small and large molecules, demonstrating that the binary is indeed a false dichotomy.

Market Dynamics and Investment Strategies

The global small molecule drug discovery market, valued at $61.9 billion in 2025, is projected to reach $103 billion by 2031. This robust growth, despite earlier predictions of biologic dominance, is largely attributed to AI-accelerated hit identification, lead optimization, and breakthroughs in oral delivery. IQVIA’s 2024 data, as noted by Murray Aitken, confirms this trend, observing a "technological upgrade" for small molecules driven by innovations in induced proximity and oral delivery.

Concurrently, the global biologics market, which reached $349 billion in 2023, is forecast to surge to $1.077 trillion by 2035. While intensified biosimilar competition is a factor as blockbuster biologics lose patent protection, innovation pipelines remain robust. Biologic growth is fueled by expanding approvals for ADCs, advancements in mRNA platform technology, scaling of CAR-T and other cell/gene therapies, and the increasing regulatory traction of RNA-based therapies.

Investment strategies in this evolving environment are heavily influenced by the size, existing infrastructure, and strategic objectives of pharmaceutical companies. Large pharmaceutical firms typically maintain diversified portfolios, encompassing small molecules, biologics, and novel emerging modalities. Their substantial resources allow them to absorb risk across various therapeutic areas and possess the manufacturing infrastructure to scale diverse modalities. In contrast, smaller biotechnology companies are often platform-driven, specializing in a specific modality or technology. While this approach carries higher risk concentration, it fosters faster, more focused innovation. As Matern explained, "Large pharma has the privilege of running diversified portfolios across molecules, biologics — maybe they can try newer modalities so they can balance some of that risk across different therapeutic areas. Whereas smaller biotechs are often built around a specific platform… a lot of biotechs are built around, ‘we have a really clever way of doing this modality — so what can we point this modality at?’" This dynamic fosters a vibrant deal-making environment, with large pharma companies frequently acquiring or licensing biotech platforms to integrate novel modalities without the need for extensive in-house development.

Small Molecule R&D: A Renaissance Underway

For many years, the prevailing narrative suggested that biologics would inevitably displace small molecules as the dominant drug modality. However, a confluence of AI-driven discovery, novel chemical approaches, and delivery innovation is challenging this narrative, opening up previously inaccessible target classes for small molecules.

The enduring advantages of small molecules—oral bioavailability, manufacturing scalability, stability, intracellular access, and lower cost of goods—ensure their continued foundational role in medicine. Matern predicts, "Small molecules will remain at the foundation because they’re scalable, they’re orally delivered, they’re stable." They are likely to remain the default modality for numerous indications, particularly in widespread conditions such as metabolic and infectious diseases, where convenience and cost-effectiveness are paramount.

One of the most significant advancements in small molecule R&D is the emergence of targeted protein degradation (TPD). Rather than merely inhibiting a protein’s function, degraders like PROTACs and molecular glues hijack the cell’s endogenous protein disposal machinery to eliminate the target protein entirely. This approach dramatically expands the druggable target space, making proteins that lack conventional binding pockets or are too large or flexible for traditional inhibitors suddenly accessible. Nello Mainolfi, CEO of Kymera Therapeutics, articulated the impact: "Targeted protein degradation allows us to reach broader patient populations compared to injectable biologics. We are developing oral drugs with biologics-like activity, reaching critical signaling nodes that have been historically ‘undruggable’ with traditional inhibitors." This innovation promises to unlock therapies for diseases previously considered intractable.

Another burgeoning frontier is RNA-targeting small molecules. Historically, RNA was considered an undruggable target for small molecules. However, recent breakthroughs in structural biology and AI are enabling the design of small molecules that can bind to and modulate RNA. These molecules hold the potential to address targets upstream of protein expression, including transcription factors and splice sites, which are often inaccessible to both traditional small molecules and most biologics. A strong commercial validation of this approach came last year when Merck Group entered a $2 billion strategic partnership with Skyhawk Therapeutics specifically focused on RNA-targeting small molecules for neurological disorders.

Perhaps one of the most commercially significant trends in small molecule R&D is the push to render complex molecules orally available, including peptides and other structures that have historically necessitated injection. The success of GLP-1 receptor agonists provides a prime example. Semaglutide, initially an injectable peptide, is now available in an oral formulation, with next-generation oral small molecule GLP-1 agonists currently in development. Matern highlighted the profound implications: "If you can make complex biological drugs orally available, you expand access, you make them stable, you can deliver them to remote corners of the world without worrying about a cold chain." Oral peptide technologies are poised to unlock a new generation of drugs that combine the precise targeting capabilities of biologics with the convenience and scalability inherent to small molecules, significantly improving patient adherence and global accessibility.

Large Molecule R&D: Expanding the Frontier

Biologics are in the midst of an unprecedented expansion, with pipelines that are broader, more diverse, and technically ambitious than ever before. What began with monoclonal antibodies in the 1980s has evolved into a sophisticated ecosystem of modalities, each possessing distinct mechanisms of action, target classes, and utility across varied patient populations.

The intrinsic advantages of biologics are significant:

High Specificity: Biologics, particularly monoclonal antibodies, can be engineered to bind to a single target with extraordinary precision, minimizing off-target effects and enhancing safety profiles.
Target Accessibility: Proteins, receptors, and ligands located on the cell surface or circulating in biological fluids are highly accessible to large molecules.
Prolonged Efficacy: Many biologics offer long-lasting therapeutic effects, some requiring dosing only monthly or even less frequently, improving patient convenience and compliance.
Diverse Mechanisms of Action: From blocking receptors and delivering cytotoxic payloads to editing genes, biologics offer a range of mechanisms unavailable to small molecules.

Monoclonal antibodies (mAbs) remain the bedrock of the biologic pipeline. Modern mAbs are increasingly engineered for improved half-life, reduced immunogenicity, and bispecific targeting, allowing them to engage two targets simultaneously. This enables novel mechanisms, such as redirecting T cells to precisely target and eliminate tumor cells. Antibody-drug conjugates (ADCs) represent another critical large molecule class, ingeniously combining the targeting precision of an antibody with the potent cytotoxic action of a small molecule payload, effectively delivering chemotherapy directly to cancer cells.

The mRNA therapies, brought into prominence during the COVID-19 pandemic, are now being rapidly diversified. Beyond infectious disease vaccines, they are being developed for oncology vaccines, rare disease treatments, and other prophylactic applications. In the broader RNA therapeutics space, siRNA (small interfering RNA) and antisense oligonucleotides (ASOs) are advanced RNA interference approaches that silence disease-causing genes at the mRNA level, achieving regulatory approvals in rare disease and cardiovascular indications.

CAR-T cell therapies utilize a patient’s own T cells, genetically engineered to recognize and destroy cancer cells. These therapies have been transformative in the treatment of hematologic malignancies, with ongoing development focused on expanding their efficacy to solid tumors. Similarly, CRISPR and other gene editing technologies are rapidly advancing, with the first approved CRISPR therapy reaching patients in 2023, marking a monumental milestone in gene-based medicine.

Oncology stands as the single largest driver of biologic R&D investment, representing the therapeutic area where the most ambitious large molecule science is being deployed. ADCs, in particular, have experienced a surge in approvals and late-stage pipeline activity, with over 100 ADCs currently in clinical development globally. Immuno-oncology, encompassing checkpoint inhibitors, CAR-T, and bispecific antibodies, continues its expansion, moving beyond hematologic cancers into the more challenging landscape of solid tumors.

The GLP-1 Story: A Case Study in Lifecycle Innovation

The remarkable success of GLP-1 receptor agonists provides a compelling illustration of the commercial and scientific power of large molecule R&D, coupled with the potential for lifecycle innovation. Drugs like semaglutide and tirzepatide have become some of the best-selling pharmaceuticals in history, validating peptide engineering on an unprecedented scale.

The GLP-1 story also exemplifies how initial biologic validation can drive subsequent small molecule development. Matern elaborated on this pattern: "GLP-1 is really showing how that balance is evolving. They are a peptide-based modality — technically in the large molecule category — but the commercial success is now driving innovation across small molecules: oral delivery and combination therapy. I think we’ll see that pattern repeat. Historically, many therapies start as injectables because it’s technically simpler to deliver a complicated molecule that way. But once you get the validation of the biology and the commercial demand becomes clear, there’s a really strong investment incentive to invest in more convenient formats."

The journey of GLP-1 agonists, from injectable peptides to orally available small molecule formulations, is likely to become a template for future modality evolution across a multitude of therapeutic areas, prioritizing patient convenience and broader accessibility once biological efficacy is firmly established.

Implications for Stakeholders

The convergence of small and large molecules, alongside the rise of hybrid modalities, carries significant implications for various stakeholders across the pharmaceutical ecosystem:

For Large Pharma: The imperative is clear: portfolio diversification across all modalities is critical. This necessitates substantial investment in advanced data infrastructure, including electronic laboratory notebooks (ELNs), robust ontologies, and structured data capture from day one. Strategic acquisition or licensing of innovative platform biotechs, ideally before their valuations fully reflect clinical validation, becomes a key tactic to access novel modalities without the lengthy and costly process of building capabilities from scratch.
For Biotechs: Maintaining a focused platform remains a strength. However, the most fundable and partnerable propositions will be those that combine a novel modality with a validated target and a clear, viable path to oral or otherwise convenient delivery. Demonstrating a strategy for overcoming "the last mile" of drug delivery will be paramount for attracting investment and securing partnerships.
For Investors: Attention should be keenly directed towards delivery technologies. Companies solving the complex problem of safely and conveniently delivering intricate molecules to their intended targets represent significant investment opportunities. This includes advancements in lipid nanoparticles, oral peptide technologies, novel ADC linker chemistry, and next-generation formulation science.
For Researchers and R&D Teams: The foundational shift is evident: the data foundation is now the new lab bench. Investing in data quality, governance, and integration—adhering to FAIR (Findable, Accessible, Interoperable, Reusable) data principles—is no longer optional but a prerequisite for AI-powered drug discovery. This paradigm demands robust data pipelines and computational literacy.

Conclusion: A Spectrum, Not a Competition

The binary distinction between small and large molecules is rapidly dissolving. Instead, the pharmaceutical industry is navigating a continuum, where the modality question is viewed as a spectrum of choices rather than a mutually exclusive competition. As Matern aptly summarized, "I don’t see small and large molecules competing for dominance. I think there’s going to be a continued balance… small molecules will remain at the foundation because they’re scalable, they’re orally delivered, they’re stable. And biologics will probably be where we continue to expand, where things like precision and durability matter."

The most profound transformation in drug discovery of this generation is the shift from empirical trial and error to data-driven prediction. Organizations are increasingly investing in data quality, governance, and seamless integration to harness the full potential of AI for accelerating drug discovery and development.

Ultimately, scientific insight alone is insufficient. The enduring challenge in drug discovery remains getting the right drug to the right target in the right patient. This necessitates continuous innovation in drug delivery—advancements in lipid nanoparticles, oral peptide technologies, sophisticated ADC linker chemistry, and next-generation formulation science are the next frontiers of breakthroughs. The expansion of the therapeutic modality toolkit is unequivocally good news for patients, for scientific advancement, and for the industry as a whole. More tools translate to more addressable targets, a wider array of treatable diseases, and ultimately, a greater number of patients benefiting from innovative medicines. In this evolving landscape, competition is not between modalities themselves, but between organizations that embrace this complexity and those that fail to adapt.