This article from Pharmacoeconomics discusses the evolving field of pharmacogenomics, which is the science of using genomic markers to predict drug response, and how it may impact the future costs, risks, and returns to pharmaceutical research and development. The authors uncover a number of factors and issues that are likely to influence the expected returns and, hence, the incentive to invest in new pharmaceutical R&D in tandem with the development of pharmacogenomics. Specifically, the authors identify how pharmacogenomics may lower the cost of drug development by shortening drug development times. Thus, pharmacogenomics may lead to an increase in a drug’s effective patent life and may also increase the demand and adoption rate for new products. For these and other reasons, the authors note, pharmacogenomics may one day enhance expected future returns to R&D, leading to higher levels of R&D investment and an increased pace of pharmaceutical innovation.