Artificial intelligence is revolutionizing the health sector, but it is especially the big players who benefit from its colossal potential.
Artificial intelligence is transforming the healthcare industry – although, for now, it is mega-caps that benefit the most from its deployment. These giant companies have the resources, data and know-how to benefit from the biggest and best benefits of this technological revolution. What is the potential of AI for the healthcare sector and what are the opportunities for smaller players?
The power of large reservoirs of data
The healthcare sector has a huge advantage when it comes to the use of artificial intelligence (AI): it has enormous amounts of data at its disposal and this data is essential when it comes to developing innovative applications using AI. As AI becomes more entrenched in the healthcare sector, major pharmaceutical and biotechnology companies such as Eli Lilly, Novo Nordisk and Amgen are attracting more and more attention.
The added value generated by AI is currently heavily concentrated in mega and large caps, as these are the companies that already have the financial means and large data sets necessary to actively pursue AI projects. By collaborating with tech giants like Microsoft and Nvidia, healthcare companies are increasing their AI capabilities and significantly shortening R&D cycles. These alliances open up new personalized perspectives for the pharmaceutical industry. These alliances open up new perspectives for personalized medicine and robot-assisted solutions, areas in which small players struggle to establish themselves.
Artificial intelligence – an exclusive driver of competitive advantage
The predominance of U.S. companies in our Bellevue AI Health fund’s portfolio can, to some extent, be attributed to developments in the field of artificial intelligence, developments that reflect the enormous investment power and enabling infrastructure of artificial intelligence in the United States.
The United States invests six times more capital in medical research than the three largest European countries. Most major AI technology providers – Nvidia, Microsoft and Qualcomm, to name a few – are also based in the United States, facilitating collaboration and driving innovation.
Companies such as Roche and Novartis have demonstrated that European companies can nevertheless compete in the field of AI. Genentech (Roche), in collaboration with Nvidia, is banking on generative artificial intelligence (GenAI) to accelerate diagnostic processes and the development of therapeutic solutions, while Novartis launched its AI Innovation Lab in 2019. Novartis’ goal is to make CAR-T cell therapies for cancer immunotherapy even more precise and to best personalize treatments for each patient.
Emerging markets out of the game – for now
Although India, Brazil and parts of Africa have considerable information technology expertise, the Bellevue AI Health fund has virtually no companies from these countries. This is explained by their low market capitalization and their poor rating in the Bellevue AI Affinity Score, which serves as an evaluation criterion for the fund’s investment activities. One exception is QuantumPharm, a Shenzhen-based company that specializes in AI and robotics to discover and develop drugs and which we consider a promising pioneer.
Emerging markets could, however, play a greater role in the future, particularly if currently high barriers to entry are reduced in the wake of falling technology costs. Small and medium-sized businesses could thus benefit from better access to the necessary data and AI technologies, allowing them to participate more in the AI-driven evolution of the healthcare market.
AI developments in niche markets
In the mid-cap segment, two companies are interesting: Procept BioRobotics has taken a decisive position with its Hydros robotic system for prostate tissue resection. Hydros is an AI-powered platform that surgeons use to plan treatment, which is then performed with single-use disposable parts, resulting in faster, safer and more consistent treatment results, regardless of regardless of the experience of the surgeon. With nearly 450 robotic systems already installed, Hydros is in an excellent position to establish itself in the market thanks to its high degree of integration and simplified workflows. Dexcom has launched an innovative new product that allows it to target a new customer segment in the diabetes space. With its recently approved Stelo glucose sensor, the company now offers a “portable” solution for diabetics who do not take insulin. This sensor helps users better understand the relationship between diet, exercise and blood sugar. Stelo expands Dexcom’s product portfolio beyond the insulin-dependent patient segment and broadens the company’s target market.
Is everything like before?
It is difficult to imagine a sector more suitable or attractive for the deployment of artificial intelligence than healthcare. The considerable quantities of data generated day after day in the healthcare system offer almost unlimited possibilities for personalized diagnosis, precision therapeutics or more efficient clinical trials. Large pharmaceutical and biotechnology companies can benefit from this data due to their vast resources and experience in handling sensitive patient health information. AI helps them identify complex patterns in large health data sets and thereby significantly increase the efficiency of their R&D activities. AI analysis of medical images and identification of active ingredients for drug formulation are examples of revolutionary developments enabled by AI.
While it may be difficult for smaller players to adapt to this new dynamic, it also offers them opportunities – for example through collaboration agreements and specialized niche applications that allow them to exploit the potential of AI without owning their own big data or having extensive resources.
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