Pharmacogenomics has recently become an integral part of the drug development process. The pharmacogenomics revolution comes at a time when pharmaceutical companies are faced with mounting pressures to lower the cost of drugs despite the continued rise in research and development spending needed to bring new drugs to market. Pharmaceutical companies want to avoid late stage failures or drugs labelled for restricted use following approval. More than twenty years of pharmacogenetic studies have established many of the genetic traits responsible for interindividual differences in the way patients metabolise drugs. The genetic polymorphisms found in the major drug metabolising enzymes (DMEs) and their associated phenotypes are well established. These monogenetic traits have a predictable influence on the pharmacokinetic and pharmacological effects of a large number of commonly prescribed drugs. This knowledge has been used to develop affordable, robust, clinical genotyping methods that can be used by pharmaceutical companies to screen patients prior to drug therapy. Prospective screening of Phase I volunteers for DME polymorphisms is done routinely at a number of pharmaceutical companies. As the pharmacogenomic initiatives at these companies evolve, more and more patients enrolled in Phase II-III clinical trials are genotyped to correlate efficacy with genetic markers that predict pharmacodynamic effects. There are a number of pharmacogenomic markers that provide useful diagnostic tools to prospectively evaluate treatment regimens, including the genetics of the host, cancerous tumours or infectious agents. The incorporation of pharmacogenomics into clinical drug development offers the opportunity for pharmaceutical companies to evaluate drugs with a better understanding of the effect that specific genetic variants will have on drug response. Prospective testing can ensure the inclusion of important phenotypic subgroups, thus impacting the efficiency of drug development. Ultimately this approach will validate the utility of genotyping prior to prescription, thereby ensuring that patients receive the right drug at the right dose the first time.