Certara (NASDAQ:CERT) executives said the company is positioning artificial intelligence as a growth driver rather than a disruptive threat, while pointing to improving biotech funding, stronger software visibility and regulatory trends that could support broader adoption of model-informed drug development.
Speaking at an RBC Capital Markets healthcare event, CEO Jon Resnick, who has been in the role for five months, said he has been struck by the depth of Certara’s scientific and regulatory expertise. He said the company’s relationships with regulators and its methodological leadership are “truly in the DNA” of the business.
AI Seen as an Enabler for Certara
Asked about AI in drug discovery, Resnick said Certara views AI as a “huge enabler” across the company. He said AI investment in the broader market is currently concentrated in early discovery, which could increase the number of compounds entering development and ultimately boost demand for model-informed drug development, or MIDD.
Resnick said Certara’s decades of work on successful products, scientific publications, embedded software products and hundreds of PhDs give it a foundation for AI-enabled development tools. He described the company’s opportunity as building on its existing workflows and scientific expertise to create applications that can “democratize” the use of modeling and simulation across the drug development life cycle.
Resnick said the AI-driven drug discovery market remains in “super early innings” and predicted an “explosion” over the next five to 10 years. He said that trend would be “a huge accelerant” for core MIDD.
Company Investing in AI-Native Products
Resnick said Certara is already adding AI functionality across much of its portfolio and that its fastest-growing products in the quarter are AI-native. He said the company is working on “agentification” of workflows and incorporating AI into roadmaps for quantitative systems pharmacology, or QSP, and physiologically based pharmacokinetic, or PBPK, tools.
He also described a potential role for Certara in what the company calls a clinical and scientific intelligence layer, sitting between broad AI models and regulated drug development workflows. Resnick cited Certara’s Simcyp product as an example of the company’s regulatory expertise, saying it is used to support labeling for areas such as drug-drug interaction and pediatric trials and is moving into areas such as pregnancy.
Demand Backdrop Improving
Resnick said Certara is seeing signs of market health, including biotech funding, new trial starts and increased engagement around AI discovery. He also cited regulatory developments supporting new approach methodologies, accelerated clinical trial execution and clarification of model-informed drug development’s role.
“After a couple rough years,” Resnick said the market is “certainly improving,” adding that client inquiries about doing things differently are an encouraging demand signal.
CFO John Gallagher said improved biotech funding has historically translated into spending by Tier 2 and Tier 3 customers after about one quarter, as capital allocation decisions are made inside biotech companies. He said Certara saw strong Q1 performance in both customer categories within software.
Resnick added that Certara’s business model allows it to sell software alone, software with expert services, or more integrated program support for biotech customers that lack large internal scientific teams.
Regulatory Trends and Growth Targets
On the regulatory environment, Resnick said he would not try to forecast agencies too closely, but described the broader move toward computational and AI-enabled approaches as a long-term trend. He said regulators in the U.S. and Europe have incentives to accelerate development timelines and speed products to market.
Resnick said Certara has reorganized around two major growth platforms. The first is MID3, or model-informed drug discovery and development, which combines scientists and technology systems to strengthen engagement with regulators, thought leadership and software development. The second is ACE, or Accelerated Clinical Evidence, focused on digitizing and accelerating data generation from protocol through submission.
Gallagher said Certara’s software business grew revenue 7% in the quarter, above expectations. He said the company expects software to perform at the top end or above the top end of its range for the year, supported by visibility through deferred revenue and expected acceleration in annual recurring revenue as the year ends.
On services, Gallagher said Certara is making operational and commercial changes against a more favorable market backdrop, including better capital markets funding and improved pharma spending.
Margins Remain a Focus
Gallagher said Certara is maintaining discipline on margins. He noted the company delivered a 30% margin in the quarter, at the bottom of its range, and said management expects first-half choppiness to resolve and growth to accelerate in the second half.
He also said Certara is taking cost actions after divesting its regulatory business, which created some stranded costs in the first half of the year. Gallagher said cost reductions and expected second-half revenue acceleration should help the company remain within its margin range.
About Certara (NASDAQ:CERT)
Certara is a biosimulation software and services company that partners with pharmaceutical, biotechnology and medical device developers to accelerate drug discovery, development and regulatory approval. The company’s platform integrates quantitative pharmacology, real-world evidence, artificial intelligence and machine learning to model and simulate drug behavior across a range of therapeutic areas and patient populations. By applying these mechanistic and data-driven approaches, Certara helps its clients predict clinical outcomes, optimize dosing strategies and streamline decision-making throughout the product lifecycle.
The company’s offerings are divided into software tools and consulting services.
