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Healthcare companies are just the latest to follow an emerging popular corporate playbook—when you hit a rut, turn to AI.
Pharma giant Novo Nordisk announced today that it’s doubling down on its partnership with private firm Valo Health, which uses artificial intelligence to help develop new weight loss drugs for diabetes, heart disease, and obesity. The deal comes amid a rough patch for the Dutch pharmaceutical company, whose market cap surpassed Denmark’s GDP last year on the back of its flagship GLP-1 weight loss drug Ozempic.
But the stock shed the wrong kind of weight and dropped about 21% in late December after its most advanced weight loss drug, CagriSema, showed only 20.4% weight loss in a clinical trial—lower than what Wall Street analysts previously projected. Shares of Novo Nordisk rose 2.76% today.
Bank of America and Deutsche Bank analysts still have faith in the pharma giant, and say now is time to buy before Novo Nordisk inflates again.
AI + Healthcare = ?
Novo Nordisk isn’t the only healthcare firm hoping to leverage machine learning to get some medical—and financial—results.
Advanced Micro Devices just announced a partnership with Absci Corp, a startup that uses AI for drug discovery. Nvidia is also jumping on the drug discovery bandwagon, partnering with Amgen and Recursion Pharmaceuticals. deCODE Genetics, a subsidiary of Amgen, is creating an Nvidia-powered supercomputer to work on genomic sequencing.
Zooming out: There's a good reason all of these AI giants are dabbling in healthcare. Pharmaceutical drug discovery is a time-consuming and laborious process that still results in the failure of 90% of the candidates that reach the clinical trial stage. That’s why doctors and pharma executives think the process is ripe for a machine learning transformation.
Now, tech companies are just hoping it can give their stocks a makeover, too.—LB