From Children's Health Defense
Eli Lilly’s multibillion-dollar acquisition of AtaiBeckley marks the largest pharmaceutical investment yet in psychedelic medicine, signaling a new phase for an industry once relegated to the margins of scientific research.
The deal, valued at approximately $2.8 billion upfront with up to $1 billion in additional milestone payments, gives Lilly control of AtaiBeckley’s experimental psychedelic therapies, including BPL-003, a fast-acting nasal spray containing N,N-dimethyltryptamine (DMT) being studied for treatment-resistant depression.
AtaiBeckley announced in October 2025 that the U.S. Food and Drug Administration (FDA) granted BPL-003 Breakthrough Therapy designation, a status intended to accelerate development of treatments for serious conditions when early evidence suggests substantial improvement over existing options.
“Millions of people are still searching for relief and desperately need a therapy that works,” said Dr. Carole Ho, president of Lilly Neuroscience. Advancing AtaiBeckley’s therapies, she said, gives Lilly “a real chance to change that.”
The company’s purchase comes as pharmaceutical companies increasingly move into a field that has attracted growing scientific interest but remains controversial because of questions surrounding commercialization, access, intellectual property — and whether corporate development will preserve the therapeutic models that shaped psychedelic research.
A turning point for psychedelic medicine
The Lilly-AtaiBeckley acquisition follows another major pharmaceutical investment in the sector. In 2025, AbbVie agreed to acquire Gilgamesh Pharmaceuticals’ experimental depression treatment Bretisilocin (GM-2505) in a deal worth up to $1.2 billion.
Bretisilocin targets the brain’s 5-HT2A serotonin receptor, the same receptor involved in the effects of classic psychedelics such as psilocybin and LSD.
Together, the deals suggest that major drugmakers increasingly view psychedelic compounds as a potential new category of mental health treatments.
Rayyan Zafar, Ph.D., a neuropsychopharmacologist at Imperial College London and member of the Centre for Psychedelic Research and Neuropsychopharmacology group, said the Lilly acquisition could help move psychedelics closer to popular medical use by making them “de-risked” for mental health utilization.
Pharmaceutical investment could extend past drug development by encouraging dialogue about insurance coverage and healthcare infrastructure needed to deliver new treatments, Zafar said.
“Beyond psychedelic clinical trials, it could also help stimulate broader discussion around reimbursement pathways and stimulate other public healthcare systems to begin preparing for rollout,” he added.
A new business opportunity — and new concerns
The pharmaceutical industry’s interest in psychedelics comes as companies search for new treatments in a mental health market full of patients who have not responded adequately — or have been harmed by — existing medications.
It also positions pharmaceutical giants to cash in.
Richard C. Deth, Ph.D., professor of pharmacology at Nova Southeastern University in Fort Lauderdale, Florida, said Lilly’s acquisition appears designed to establish a foothold in an emerging financial space.
“Clearly Lilly is buying to create a position in anticipation of an expanding market for these types of compounds,” Deth said.
Drugwatch senior writer Terry Turner said pharmaceutical companies are entering the field because of both commercial opportunity and unmet medical need.
“With Big Pharma companies, profit is always part of it, no question,” Turner said. “And there is a gold rush going on with psychedelics right now.”
He added that the combination of increased government attention, scientific interest and patients seeking alternatives has created momentum for the industry.
“Add all that up, and you’ve got a perfect storm pushing psychedelics from the lab into mainstream mental health care,” Turner said.
‘Enormous financial incentive to build intellectual property around psychedelics’
A central concern surrounding the pharmaceutical industry’s entrance into psychedelics is how companies will protect their investments and build exclusive trademarks around substances that often exist in nature — and what that means for patients.
Experts say companies generally cannot patent naturally occurring psychedelics in their original forms. However, they will seek intellectual property protections for modified compounds, delivery systems, manufacturing methods and specific medical uses.
Shannon Hughes, Ph.D., co-founder of Elemental Psychedelics, said patent strategies are central to the pharmaceutical business model.
“They’re clearly trying to patent certain psychedelics,” Hughes said. “Drug analogs of MDMA, DMT, LSD and psilocybin are being patented. Pharma companies wouldn’t enter the psychedelic business if they couldn’t patent the molecule.”
Hughes said naturally occurring compounds such as psilocybin and DMT cannot typically be patented in their natural state, so companies must create new intellectual property around pharmaceutical versions.
“Commercialization hinges on monopolization,” Hughes said. “Without patents, major pharmaceutical firms would not invest billions into late-stage clinical trials.”
She pointed to the BPL-003 nasal spray as an example of how companies are creating proprietary psychedelic medicines.
“AtaiBeckley’s lead candidates — such as BPL-003, an intranasal synthetic form of 5-MeO-DMT, and VLS-01, a buccal film of DMT — are specifically engineered, patented drug products designed to create defensible market monopolies,” Hughes said.
Brag Burge, founder of Integration Communications, a public relations firm specializing in psychedelic organizations, told The Defender pharmaceutical companies are not looking to control the substances themselves but to take over a multi-faceted approach to applying them.
“The commercial strategy is generally not to claim ownership over a naturally occurring psychedelic itself, but to patent new compounds, synthesis processes, formulations, delivery systems, combinations, and specific medical uses,” he said.
“There is an enormous financial incentive to build intellectual property around psychedelics, especially if that intellectual property can produce a treatment that is easier to manufacture, administer, insure or scale.”
How will pharma alter the psychedelic experience?
The development of pharmaceutical psychedelics may also change how these substances are experienced.
Unlike traditional psychedelic experiences, which may last several hours and often involve extensive preparation and integration, some new compounds are designed to shorten the duration of the psychedelic state to fit within existing healthcare systems.
The Multidisciplinary Association for Psychedelic Studies (MAPS), a nonprofit launched four decades ago to advocate for beneficial uses of psychedelic substances and marijuana, told The Defender they fear the overall healing potential for psychedelics could be lost in the Lilly-like takeovers.
“It’s good because a traditional pharma company sees value in the substances and the research being done in the psychedelic ecosystem,” the group said in a statement to The Defender. “It’s worrisome because we see therapy being left behind, and just the psychedelics being their main interest. So we can wait and see what and how they roll it out, but be ready to put pressure on them if it ends up being something far from the therapy-assisted focus we’ve researched and supported.”
Hughes said the psychedelic experience itself could also be altered with Big Pharma involvement.
“Pharmaceutical development of psychedelic molecules inherently removes the psychedelic ingredient from its natural biological context (the plant, fungus, or animal) as well as from its cultural context of use,” she said.
“This extraction from context changes how we interact with the drug and how its effects are experienced. It may even change the effects themselves, as what we consider to be the psychedelic ingredient might also be dependent on the myriad other known and unknown compounds that make up the plant system.”
She added:
“This is an experiment that we’ve done over and over, and generally the outcomes do not go in our favor. We extracted nicotine from the tobacco plant — both the chemical of nicotine and its traditional cultural and contextual use as a medicine — and we put it into the hands of industry.
“The outcome is addiction and chronic illness. We extracted opium from the poppy, and cocaine from the coca leaf. Might we be repeating this pattern by extracting or synthesizing psilocybin from the psilocybin-containing mushroom, and so on with other psychedelics?”
Altering psychedelic compounds could create unintended consequences
Researchers and companies developing psychedelic medicines emphasize that controlled pharmaceutical formulations may improve consistency and safety.
Critics argue that changing the compounds or shortening psychedelic experiences could introduce new risks.
Turner said early trials of BPL-003 have reported mostly mild to moderate side effects, including nausea, temporary blood pressure increases and nasal irritation.
However, he said some risks may become apparent only after widespread use.
“As far as severe side effects go, you don’t often find out what those may be until a pharmaceutical is on the market for a while and a large number of people have been taking it,” Turner said.
Hughes said altering psychedelic compounds could create unintended consequences.
“We also don’t understand the entourage effects involved in the whole plant or fungus,” she said. “Removing one ingredient that we think is ‘the’ important ingredient and using it in isolation can absolutely create unforeseen risks and side effects.”
She said shorter, more intense psychedelic experiences could create additional challenges.
“Shortened, hyper-intense psychedelic experiences can lead to acute distress, disorientation or destabilization if a patient is discharged too quickly without adequate psychological preparation, grounding and relational support,” Hughes said.
Burge said researchers should continue evaluating not only whether psychedelic medicines work, but how they work and what elements of the experience contribute to outcomes.
“Every psychedelic has side effects, meaning effects beyond the main outcome being sought,” Burge said.
He noted that the subjective psychedelic experience itself can be part of the therapeutic process.
“Some researchers and companies describe hallucinations as an unwanted side effect, while others believe the subjective experience — including visions, emotions, memories and changes in perspective — might be central to how psychedelic therapy works,” Burge said.
A $7 billion market by 2032?
Despite ongoing debate, investors and analysts expect the psychedelic medicine sector to expand.
Bloomberg estimates the psychedelic-treatment market could reach approximately $7 billion in annual sales by 2032.
In recent years, Johnson & Johnson’s Spravato (esketamine) nasal spray became the only FDA-approved psychedelic-derived medicine for treatment-resistant depression.
First approved in 2019 for use with an oral antidepressant, the drug received expanded FDA approval in January 2025 as the first and only standalone (monotherapy) treatment for adults with treatment-resistant depression.
Spravato reported $468 million in first-quarter 2026 sales, up 46% year over year.
Meanwhile, other psychedelics have shown promise for treating mental health issues.
Compass Pathways reported positive six-month Phase 3 trial data showing its investigational synthetic psilocybin treatment, COMP360, delivered quick and lasting benefits for patients with treatment-resistant depression, reinforcing results from an earlier trial.
The company said 39% of patients receiving the 25-milligram dose achieved a clinically meaningful reduction in depression symptoms by week six after two doses and maintained that benefit through at least week 26.
COMP360 also continued to demonstrate a generally well-tolerated safety profile with no new safety findings, the company said.
Compass said the results strengthen its rolling New Drug Application with the FDA, with final submission expected in the fourth quarter of 2026. If approved and rescheduled by the Drug Enforcement Administration, the company expects to launch COMP360 in the first half of 2027.
At the same time, lawmakers continue to advance legislation related to psychedelic substances as interest grows in their potential use for treating mental health conditions, including post-traumatic stress disorder and depression.
President Donald Trump signed an executive order in April directing federal agencies to accelerate the review of certain psychedelic therapies, including ibogaine.
While several states have approved research funding, pilot programs or regulated therapeutic access, federal law continues to classify most psychedelics as Schedule I controlled substances.
The FDA did not respond to requests for comment.
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