Insights into the genetic basis of human disease are helping to address some of the key challenges in new drug development including the very high rates of failure. Here we review the recent history of an emerging, genomics-assisted approach to pharmaceutical research and development, and its relationship to Mendelian randomization (MR), a well-established analytical approach to causal inference. We demonstrate how human genomic data linked to pharmaceutically relevant phenotypes can be used for (1) drug target identification (mapping relevant drug targets to diseases), (2) drug target validation (inferring the likely effects of drug target perturbation), (3) evaluation of the effectiveness and specificity of compound-target engagement (inferring the extent to which the effects of a compound are exclusive to the target and distinguishing between on-target and off-target compound effects), and (4) the selection of end points in clinical trials (the diseases or conditions to be evaluated as trial outcomes). We show how genomics can help identify indication expansion opportunities for licensed drugs and repurposing of compounds developed to clinical phase that proved safe but ineffective for the original intended indication. We outline statistical and biological considerations in using MR for drug target validation (drug target MR) and discuss the obstacles and challenges for scaled applications of these genomics-based approaches.