Tech giant Nvidia, which reported a remarkable 22 per cent quarter-on-quarter earnings growth in its February results, has said that healthcare only accounts for around 1 per cent of its $100 billion data centre business.
However, that figure is set to skyrocket as healthcare is poised to become the biggest vertical in its data centre segment within the next 10 years, according to Janus Henderson Investors’ research analyst Tim McCarty and portfolio manager Andy Acker.
“Within a decade, the healthcare sector could be among the biggest users – and beneficiaries – of artificial intelligence,” the duo said, noting that some AI applications are already yielding tangible results for both patient outcomes and company revenues.
For instance, it typically takes at least 10 years and billions of dollars for a company to bring a new therapy to market.
However, McCarty and Acker suggest that AI algorithms could significantly accelerate one part of this process – target identification and drug discovery.
“Today, new AI algorithms are being developed to identify drug targets and create molecules based on modelling of biological and chemical datasets,” they said.
With advances ongoing in this segment of the industry, researchers are closer to understanding the biology of disease, therefore speeding up the process and lowering the cost of bringing new drugs to market.
On the other side of the coin, the duo warned that turning AI’s potential into viable treatments for patients still presents its challenges, noting that an AI-focused biotech company has yet to bring a drug to market, and therapies still have to go through the process of human clinical trials and regulatory reviews.
As such, they urged investors to reorient their focus on companies providing the “picks and shovels” behind AI-driven drug research, including DNA sequencing and related services.
“For now, we think the prudent way to think about AI and drug discovery is to recognise the technology as one of many structural trends that could propel a high rate of growth in biopharma in years to come.”
Last month, the World Economic Forum similarly identified AI as a “transformative force” within the world’s five largest economies, with healthcare emerging as a key beneficiary in both the US and China.
Looking at the former, the World Economic Forum said that amid a “fervent gold rush” in private AI – with venture capital investments in AI totalling US$290 billion over the last five years – healthcare has stood out as an area of focus for the US.
“Major US healthcare companies and venture capital firms are actively investing in AI-powered medical diagnostics and remote patient monitoring technologies,” it noted.
Driven by the nation’s ageing population and increasing calls for greater investment in tools to streamline administrative processes and resource allocation in hospitals, demand for AI-driven healthcare solutions continues to surge.
“Moreover, the US Food and Drug Administration’s (FDA) increasing openness to approving AI-powered medical devices, exemplified by recent approvals such as an AI-based system for early detection of diabetic retinopathy, is fostering confidence among investors and driving further investment in healthcare AI,” the body added.
