Drying is a crucial unit operation within the functional foods and biopharmaceutical industries, acting as a fundamental preservation technique and a mechanism to maintain these products' bioactive components and nutritional values. The heat-sensitive bioactive components, which carry critical quality attributes, necessitate a meticulous selection of drying methods and conditions backed by robust research. In this review, we investigate challenges associated with drying these heat-sensitive materials and examine the impact of various drying methods. Our thorough research extensively covers ten notable drying methods: heat pump drying, freeze-drying, spray drying, vacuum drying, fluidized bed drying, superheated steam drying, infrared drying, microwave drying, osmotic drying, vacuum drying, and supercritical fluid drying. Each method is tailored to address the requirements of specific functional foods and biopharmaceuticals and provides a comprehensive account of each technique's inherent advantages and potential limitations. Further, the review ventures into the exploration of combined hybrid drying techniques and smart drying technologies with industry 4.0 tools such as automation, AI, machine learning, IoT, and cyber-physical systems. These innovative methods are designed to enhance product performance and elevate the quality of the final product in the drying of functional foods and biopharmaceuticals. Through a thorough survey of the drying landscape, this review illuminates the intricacies of these operations and underscores their pivotal role in functional foods and biopharmaceutical production.