The genetic, functional or compositional heterogeneity of healthy and diseased tissues presents major challenges in drug discovery and development. Such heterogeneity hinders the design of accurate disease models and can confound the interpretation of biomarker levels and of patient responses to specific therapies. The complex nature of virtually all tissues has motivated the development of tools for single-cell genomic, transcriptomic and multiplex proteomic analyses. Here, we review these tools and assess their advantages and limitations. Emerging applications of single cell analysis tools in drug discovery and development, particularly in the field of oncology, are discussed.