Despite the recent rise in academic and practitioner interest in the development of personalized medicine in the pharmaceutical industry, no study has yet assessed the corporate capability of such development. This study thus develops a model to illustrate the corporate capability of personalized medicine development (PMD capability) in the pharmaceutical industry. First, we define three key influencing factors for PMD capability, namely new product development (NPD) capability, External drug–CoDx co‐development (CoDxD) capability [i.e. the capability of drug–CoDx (companion diagnostics) co‐development with external companies], and Internal CoDxD capability (i.e. the capability of drug–CoDx co‐development with an internal organization). Then, a research model is developed, and by carrying out a structural equation modeling analysis, we successfully find a good fit of the model and that the critical path to contribute to PMD capability runs from NPD capability via External CoDxD capability rather than via Internal CoDxD capability.