Outlook for AI on the Pharmaceutical Industry

Patrick Scardina, Atradius Regional Underwriting Manager discusses the trends seen so far with Artificial Intelligence integrating with the Pharmaceutical industry.


Integrating AI into Healthcare

Artificial Intelligence (AI) is already an integral part of our daily lives, extending its influence into healthcare, from our homes to our devices. The healthcare industry is no different. AI is making significant strides, with wearable devices monitoring glucose levels and heart rates. Experts see AI as a potentially huge area of growth in the pharmaceutical industry soon and are seeing some momentum. The pharmaceutical industry offers many opportunities for the application of AI to improve research, drug development, and patient outcomes.

Current Trends and Growth Opportunities

According to Morgan Stanley, the pharmaceutical sector could spend approximately $50 billion annually in AI within the next decade. The aim would be to expedite drug development and reduce time to market, ultimately delivering quicker innovative therapies. One of the industry’s greatest risks is the time it takes drugs to move from inception to the market. Global AI spending in the pharma industry has soared to $1.64 billion this year, growing by 33% annually and projected to hit $4.6 billion by 2027. Capitalization rates are expected to grow by 29.4% yearly through 2026.

AI Applications and Transformative Impact

AI is in use with clinical trials and medication adherence tracking, heralding a future of more proactive healthcare. Cloud computing is also leveraged to monitor patients’ needs and preferences. This is driving increased demand that may have otherwise been undetected or unaddressed. This shift towards AI-driven healthcare promises to be more revolutionary than reactionary, fostering longer, healthier lives while reducing costs for patients, insurers, and government-funded programs.

Regional Dynamics and Collaborations

The major players in the healthcare market will benefit from robust profit margins. Coupled with strong backing from investors and lenders, they have the capability and incentive to invest in tomorrow. North America dominates AI healthcare spending with over 40% market share, yet South America is experiencing rapid growth at around 45% year-over-year. Collaboration between pharmaceutical companies and AI specialists is increasing, with giants like Merck, Pfizer, and Teva partnering with Amazon Web Services for AI ventures and therapies. Some top pharmaceutical companies are also choosing to hire their own in-house AI teams to create data systems and maintain proprietary data away from competitors.

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Financial Considerations and Industry Response

Initial investment in AI technologies can be daunting, with recent U.S. collaborations in the nine-figure range. This may exclude smaller companies unless they secure substantial investor backing. The success of AI may strain companies without it, potentially leading to bankruptcy, mergers, or acquisitions. Careful consideration of regulatory aspects and close collaboration among industry players are crucial for maximizing the benefits of AI in healthcare.

Our most recent Pharmaceuticals Industry report is linked here for further information. Stay up to date on the Pharmaceuticals Industry by visiting our industry page.