Dive Brief:
- The healthcare industry makes the most equity deals involving artificial intelligence (AI) startups, a presentation hosted by CB Insights revealed.
- AI equity deals have skyrocketed over the past year, according to CB Insights data, as more and more companies find specific use cases for the tech to give them a competitive edge.
- The biopharma industry in particular is ripe for this kind of technological disruption because it is so bogged down by long lead times from drug research to clinical trials to market offerings.
Dive Insight:
AI startups nab new rounds of funding almost every day, but corporations are snapping them up as well — especially the healthcare industry. As AI is implemented into healthcare and biopharma operations, the tech holds the potential to accelerate supply chains.
One particular way AI may help transform biopharma is by accelerating the drug discovery process.
A drug's lead time from discovery to pharmacy shelves is often 10 years or longer. Sometimes in the discovery phase it can take three to five years just to find a lead compound for a new drug.
Pfizer Vice President of Digital Strategy Judy Sewards said in the presentation, "I work in an industry where it takes 12 years to launch a product. That’s three presidential terms, or three World Cups … Where we start to think about AI is how can we speed up the process, make it smarter, connect breakthrough medicine and connect patients who need it the most?"
A report by McKinsey&Company shows being first-to-market is actually a sizable big advantage for a drugmaker, and among the established pharmaceutical companies, it's usually a race.
If biopharma and healthcare companies can equip AI in drug discovery to automate compound screenings and tests, then they could accelerate their supply chains, save money and potentially widen profit margins.
The problem is, long lead times are often necessary and an advantage to the pharmaceutical company. They allow the company to raise millions in funding rounds from investors while still in the research phases of a new drug, and even if the drug fails in clinical trials, the company is still well-capitalized.
Not only that, but the biopharma industry is cautious about AI, because they believe there's only so much technology can do to transcend and change the industry, simply because human biology is so complex and often difficult to understand. Other industry experts are skeptical of the assumption AI can so easily solve such a complicated part of the biopharma industry.
Most agree on the potential AI holds for healthcare, biopharma and drug discovery, but exactly how AI can help and how much is still up for debate.