Approaches to increase the efficiency in developing drugs and diagnostics tools, including new drug delivery and diagnostic technologies, are needed for improved diagnosis and treatment of major diseases and health problems such as cancer, inflammatory diseases, chronic wounds, and antibiotic resistance. Development within several areas of research ranging from computational sciences, material sciences, bioengineering to biomedical sciences and bioimaging is needed to realize innovative drug development and diagnostic (DDD) approaches. Here, an overview of recent progresses within key areas that can provide customizable solutions to improve processes and the approaches taken within DDD is provided. Due to the broadness of the area, unfortunately all relevant aspects such as pharmacokinetics of bioactive molecules and delivery systems cannot be covered. Tailored approaches within (i) bioinformatics and computer‐aided drug design, (ii) nanotechnology, (iii) novel materials and technologies for drug delivery and diagnostic systems, and (iv) disease models to predict safety and efficacy of medicines under development are focused on. Current developments and challenges ahead are discussed. The broad scope reflects the multidisciplinary nature of the field of DDD and aims to highlight the convergence of biological, pharmaceutical, and medical disciplines needed to meet the societal challenges of the 21st century.