Can AI reverse Eroom's Law?

Eroom’s Law (the reverse of “Moore’s Law”), for those of us who don’t spend all our days thinking about pharmaceutical innovation, is a term describing the historical trend that the R&D cost of developing a new drug seems to have gone up a lot over the past sixty or so years. Interestingly, the “Law” flattened out since 2010, but it’s merely stagnated, not reversed. There’s a lot of optimism in the biotech world that AI could turn Eroom’s Law in reverse. Investor Elliot Hershberg has a thoughtful essay arguing that the Law emerged partially because only a few large pharma companies are currently able to take promising research leads and commercialize them. That means innovation is essentially “rate-limited” by those firms’ ability to move drugs through the pipeline. What we need are regulatory changes that make it easier for small biotech firms to work through that pipeline themselves. This is one of many reasons we’ve been prioritizing clinical trial abundance here at AGF.