Efforts in genomics over the last decade have created a stream of opportunities for drug discovery. High-throughput DNA sequencing has forced a re-definition of the paradigm for identification and validation of targets for drug development. One purpose of this review is to delineate the different approaches to sequence data generation and to establish their various uses for the definition of gene function. There still remain crucial dilemmas for the pharmaceutical industry. The multitude of potential targets can each absorb enormous validation costs and the vast majority are likely to prove academically interesting but useless for drug development. An additional dimension arises from the importance of sequence variation between different individuals. These differences can determine response to therapy and must inform both the drug development process and healthcare delivery. This presents great challenges and opportunities for drug companies, their customers and society as a whole. I will review the technological aspects in some detail and give my view of the legal and social aspects. The field of bioinformatics is at the core of functional and pharmacogenomics and advances will depend on the continuing evolution of tools to interpret data. For the most part this evolution is reviewed in the context of specific application areas rather than as a discrete field, in recognition of its all-pervasive effects.