OpenAI Backs Alphabet's AI Drug Unit With $600 Million

Isomorphic Labs, a subsidiary of Alphabet Inc. specializing in artificial intelligence-driven drug discovery, has secured $600 million in funding, marking the first time it has raised external capital.

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The investment round was spearheaded by Thrive Capital, with additional contributions from Alphabet and its venture capital division, GV. However, the company did not disclose its valuation. Thrive Capital, a well-known investment firm, has also backed OpenAI, a key competitor to Alphabet’s Google in the AI sector. OpenAI has been instrumental in developing and commercializing AI-driven consumer applications, such as advanced chatbots.

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Founded in 2021, Isomorphic Labs was established as a spin-off from DeepMind, the AI research company Alphabet acquired in 2014. The company is led by Demis Hassabis, who also heads Google’s broader AI initiatives.

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Since its inception, Isomorphic Labs has made significant strides in the pharmaceutical space, including forming strategic alliances with major industry players such as Novartis AG and Eli Lilly & Co. These partnerships underscore the company’s efforts to integrate artificial intelligence into the complex process of drug discovery.

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This latest funding round aligns with a broader trend among Alphabet-owned businesses, as the tech giant has increasingly opened up its subsidiaries to external investment. Last October, Waymo, Alphabet’s self-driving car division, successfully raised $5.6 billion. That round pushed Waymo’s valuation above $45 billion, highlighting the strong investor interest in Alphabet’s ventures beyond its core search and advertising business.

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Isomorphic Labs’ focus on AI-driven drug discovery places it at the intersection of technology and biotechnology, a rapidly growing sector attracting substantial investor attention. AI has shown promise in revolutionizing pharmaceutical research by accelerating drug development timelines and reducing costs.

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By leveraging machine learning algorithms, Isomorphic Labs aims to identify new potential treatments faster than traditional methods, which often take years of research and clinical trials.

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Alphabet’s decision to allow external funding for Isomorphic Labs suggests confidence in the company’s long-term potential and reflects a shift in strategy. Historically, Alphabet has maintained tight control over its AI ventures, funding them internally.

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However, the increasing financial demands of developing cutting-edge AI solutions and the growing investor appetite for AI-driven innovation appear to have prompted Alphabet to invite outside capital into select subsidiaries.

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The involvement of Thrive Capital is particularly notable given its track record in AI investments. As a backer of OpenAI, Thrive has demonstrated a keen interest in companies at the forefront of artificial intelligence breakthroughs. OpenAI’s development of large language models, including ChatGPT, has positioned it as a formidable player in the AI landscape, often seen as a direct competitor to Google’s AI initiatives.

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By investing in Isomorphic Labs, Thrive is diversifying its AI portfolio and signaling strong confidence in AI’s role in reshaping industries beyond just search and digital assistants.

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While the exact valuation of Isomorphic Labs remains undisclosed, the significant funding suggests that investors see strong growth potential in AI-driven pharmaceutical research. The drug discovery process is notoriously expensive and time-consuming, often taking over a decade and billions of dollars to bring a new drug to market. AI promises to streamline this process by analyzing vast datasets, predicting molecular interactions, and identifying promising drug candidates with greater efficiency.

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Isomorphic Labs is part of a growing movement within the pharmaceutical industry that seeks to harness AI for drug discovery. Other major players in this space include Insilico Medicine, BenevolentAI, and Recursion Pharmaceuticals, all of which are leveraging AI to revolutionize how new medicines are developed. With the backing of Alphabet and deep AI expertise inherited from DeepMind, Isomorphic Labs is well-positioned to be a leader in this emerging field.

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Beyond its financial implications, the investment in Isomorphic Labs reflects a broader shift in Alphabet’s approach to AI commercialization. While Google has historically focused on integrating AI into its core products, such as search and cloud computing, the company is now increasingly looking to apply AI in sectors like healthcare, transportation, and enterprise solutions.

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The rise of AI-powered drug discovery represents one of the most promising applications of the technology, with the potential to transform global healthcare by making treatments more accessible and efficient.

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In addition to its partnerships with Novartis and Eli Lilly, Isomorphic Labs is expected to continue forming strategic alliances with pharmaceutical firms. These collaborations are critical, as they provide access to industry expertise, proprietary datasets, and regulatory knowledge—key elements for successfully bringing AI-developed drugs to market. By working with established pharmaceutical companies, Isomorphic Labs can bridge the gap between AI research and real-world medical applications.

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As AI investment accelerates, companies like Isomorphic Labs will likely play a crucial role in shaping the future of drug development. With $600 million in fresh capital, the company is well-equipped to advance its research, expand its workforce, and scale its AI models for greater impact. Alphabet’s continued involvement, alongside Thrive Capital’s backing, reinforces the growing belief that artificial intelligence will be a driving force in the next generation of pharmaceutical innovation.

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