As the pharmaceutical industry starts developing novel molecules developed based on molecular biology principles and a better understanding of the human genome, it becomes increasingly important to develop early indicators of activity and/or toxicity. Biomarkers are measurements based on molecular pharmacology and/or pathophysiology of the disease being evaluated that may assist with decision-making in various phases of drug development. The utility of biomarkers in the development of drugs is described in this review. Additionally, the utility of pharmacokinetic data in drug development is described. Development of biomarkers may help reduce the cost of drug development by allowing key decisions earlier in the drug development process. Additionally, biomarkers may be used to select patients who have a high likelihood of benefit or they could be used by clinicians to evaluate the potential for efficacy after start of treatment.