The opportunity for artificial intelligence (AI) to impact the healthcare sector is enormous.
Over the past few years, artificial intelligence (AI) has emerged as the world’s next megatrend. So far, breakthroughs in generative AI have mainly occurred in the technology industry.
Semiconductor specialist NVIDIA, in particular, is now seen as the engine that will power AI vehicles. Demand for the company’s most powerful graphic processing units (GPUs) is sky-high, and investors have priced the company’s stock accordingly. Yet many use cases for AI continue to remain largely overlooked by investors.
For one, AI is creating exciting new opportunities in healthcare. Companies driving AI in healthcare include major player Novo Nordisk and smaller player Hippocratic AI, but Eli Lilly is also a leader in the field. (L.L.Y. 0.18%) As the biggest opportunity. Here’s why:
AI brings huge opportunities to healthcare
AI has the potential to impact many areas of healthcare, including service-oriented work such as nursing, software platforms, and hardware devices.
According to Precedence Research, the global total addressable market (TAM) for healthcare AI is currently approximately $26.7 billion. This market is expected to grow at a compound annual growth rate of 37% between 2024 and 2034, reaching $614 billion. The US healthcare AI market alone is projected to reach $195 billion by 2034.
Image source: Getty Images
Which companies are implementing AI in healthcare?
One of the biggest challenges facing the healthcare industry today is human resources: according to a report published by multinational conglomerate Philips, the shortage of human resources in hospitals is driving demand for digital infrastructure in the form of automation solutions.
A startup called Hippocratic AI is tackling this talent shortage head on by developing a healthcare agent powered by large-scale language models (LLMs). Essentially, the company wants to bring artificial general intelligence to the world of healthcare, and it’s doing so using Nvidia’s Avatar Cloud Engine.
Another leading company helping to bridge the gap between healthcare and AI is Danish pharmaceutical giant Novo Nordisk, developer of diabetes and obesity drugs Ozempic and Wegovy.
Novo Nordisk is partnering with French IT company Atos to develop a supercomputer to spearhead research for the biotech and pharmaceutical industries. The supercomputer will be equipped with GPUs from Nvidia and Intel and will be stored in one of Digital Realty’s data centers in Denmark.
Why do I see Lily as the biggest opportunity?
Novo Nordisk and Hippocratic AI’s projects are exciting, but I think there are some risks to their ambitions. First, Hippocratic AI is still a startup. It may be a long time before the company makes a significant contribution to patient care (if it even makes a contribution at all). Furthermore, Novo Nordisk’s supercomputing projects are so extensive that I find the investment prospects somewhat unattractive.
In contrast, Eli Lilly has identified specific opportunities to pursue and is using AI to find solutions, specifically partnering with OpenAI, the developer of ChatGPT, to support research into treating drug-resistant pathogens.
According to a report by MarketsandMarkets, the global market size for antibiotic resistance is expected to reach $7.7 billion by 2028. Furthermore, the World Bank predicts that the negative economic impact of antibiotic resistance could exceed $1 trillion per year by 2030.
Eli Lilly is already one of the world’s leading pharmaceutical companies, with a portfolio that includes a number of blockbuster products, including Verzenio, Trulicity, Taltz, Jardiance, Mounjaro and Zepbound, and the company is poised to make a big splash in the $31 billion Alzheimer’s disease market.
Eli Lilly is not only focusing on a large and underserved segment of healthcare, but is also partnering with a leading AI company to tackle that challenge. It could be years before Lilly makes a breakthrough in developing new antibiotics that can combat bacteria that have become resistant to currently available treatments, or the effort may ultimately fail.
But if I had to pick one company I think is most likely to succeed at the intersection of AI and healthcare, I would choose Eli Lilly. Given the company’s long track record in drug development and commitment to innovation, I see some similarities between Nvidia’s profile in the tech space and Eli Lilly’s impact in healthcare.
I believe the company is building a foundation for long-term success and will achieve new levels of innovation beyond the medical lab. If investors are looking for high-growth opportunities in healthcare AI, I believe Eli Lilly is the best option.
Adam Spatacco has investments in Eli Lilly, Novo Nordisk, and Nvidia. The Motley Fool has invested in and recommends Digital Realty Trust and Nvidia. The Motley Fool recommends Intel and Novo Nordisk and recommends short Intel’s November 2024 $24 call options. The Motley Fool has a disclosure policy.
