The efficiency and accuracy of the drug development process is severely restricted by the lack of functional human cell systems. However, the successful derivation of pluripotent human embryonic stem (hES) cell lines in the late 1990s is expected to revolutionize biomedical research in many areas. Due to their growth capacity and unique developmental potential to differentiate into almost any cell type of the human body, hES cells have opened novel avenues both in basic and applied research as well as for therapeutic applications. In this review we describe, from an industrial perspective, the basic science that underlies the hES cell technology and discuss the current and future prospects for hES cells in novel and improved stem cell based applications for drug discovery, toxicity testing as well as regenerative medicine.