From Hype To Reality, AI Reshapes Pharmaceutical Industry Across Drug Discovery To Marketing - Stocks To Watch

Pharmaceutical companies have been at the forefront of artificial intelligence for quite some time. Researchers have been using advanced AI models to understand disease mechanisms even before the recent surge in interest.

Wednesday, researchers at Alphabet Inc’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google DeepMind developed AlphaFold 3, a new artificial intelligence (AI) model.

AlphaFold 3 can predict the structure and interactions of biological molecules. This includes proteins, DNA, RNA, and small molecules that could function as drugs. 

According to the latest McKinsey Global Institute report, AI technology could generate $60 billion—$110 billion annually in economic value for the pharmaceutical industry, as it can help speed up the process of identifying compounds, their development, and approval.

The report adds that generative AI’s impact on pharmaceuticals is expected to be profound as the foundational models are built on languages, images, omics, patient information, and other types of data that come together to explain and solve the disease process and effective treatment ways.

Increased drug discovery, approval, and marketing speed can help companies resolve the asset life cycle compression issue, which is the diminishing amount of time companies have to capture the value of the new drug.

McKinsey’s research shows that the time has decreased to 9.8 years from 11.7 years over the past 20 years.

Despite the speedy discovery, the average cost of discovering and developing new drugs has increased.

Generative AI using augmented foundational models can help accelerate pharma research, with drug discovery timelines cut by almost half. AI tech can have a potential economic value of $15 billion-$28 billion on research and discovery.

The report notes that, on average, ten years and around $1.4 billion are needed to bring one new drug to the market, of which 80% is associated with clinical development. 

Generative AI addresses pain points by increasing efficiency across the clinical development process, unlocking the economic value of $13 billion to $25 billion.

Generative AI tools can deepen relationships between care providers, pharmacists, insurers, and patients to fine-tune campaign strategies in real time, per the report. 

Pharma professionals and patients will have substantial data to make faster, smarter decisions, providing a potential opportunity of $18 billion to $30 billion.

In 2023, the World Health Organization unveiled a comprehensive publication highlighting critical regulatory considerations for harnessing the potential of AI in healthcare. 

In April, Bayer AG (OTC:BAYRY) and Google Cloud announced a collaboration to develop AI solutions to support radiologists.

Key players shaping the market include industry giants such as Nvidia Corp (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC), International Business Machines Corporation (NYSE:IBM), Google, General Electric Co (NYSE:GE), Microsoft Corporation (NASDAQ:MSFT), Medtronic Plc (NYSE:MDT), Micron Technology Inc (NASDAQ:MU), Amazon Web Services, and Siemens Healthineers.

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