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A drug is a chemical that interacts with proteins in the body to affect a physiological function. This is the general idea behind all medicine. Once these chemicals are absorbed into the systemic circulation they bind with certain proteins and this changes the functioning of the cell slightly. For example, anticancer drugs bind to proteins on the surface of cancer cells this stimulates the cells to die. In this case cell death is the physiological action of the drug.
No drugs are specific to interacting with just one type of cell or one type of protein and this is what causes side effects. Again using an anticancer drug as an example, the medication works by binding to very rapidly dividing cells, such as cancer cells, however hair cells are also rapidly dividing and that is why one of the side effects of anticancer drugs is hair loss.