Biopharmaceuticals, or protein drugs, have proven to be safe and effective therapies in many disease indications. However, the first generation of biopharmaceuticals has largely been limited to replicating the functions of native human proteins, or inhibiting these functions through the use of monoclonal antibodies. Recent advances in the design of biopharmaceuticals include computational approaches to manipulate protein structure, improved screening processes to synthesize and assay libraries of novel proteins, and new methods to modify proteins post-translationally and during production. Protein drug structure and function can now be optimized in the same way that small molecules are optimized via medicinal chemistry. This review addresses recent developments in the field of protein 'medicinal biology', and provides examples of how these tools are being applied to create the next generation of biopharmaceuticals possessing optimized drug properties and novel functions.