International competition in the pharmaceutical industry is increasingly becoming a competition with respect to the ability to understand complex biological processes and exploit the rapidly growing amount of biological information. The methods that are currently applied in the development of new medicines suffer from the lack of effective means to evaluate, combine, and accumulate biological knowledge. Essential improvements must involve the use of computational models that can provide a dynamic and more quantitative description of the relevant biological, pathological, and pharmacokinetic processes. We propose to establish a Network of Excellence that can restructure and strengthen the area of biosimulation by focusing on the development of professional, physiologically based models that can help the pharmaceutical industry develop safe and effective drugs at significantly lower costs. The modelling approach is strongly recommended by the American Food and Drug Administration that already uses mathematical models in its evaluation of applications for drug approval. Academic institutions in Europe have significant expertise in biological modelling, and several groups are individually at the research front in their specific areas. At the present, however, the research is strongly fragmented, and the industry itself has relatively few qualified experts in the field. The Network will provide a new forum for collaboration across disciplinary boundaries as well as between industry and academia. The BioSim Network involves 26 leading academic groups, 9 small and medium-sized enterprises, 1 large pharmaceutical industry, and the Danish, Spanish, Dutch, and Swedish regulatory agencies. The Network collaborates with the European Federation for Pharmaceutical Sciences (EUFEPS).