How the Pharmaceutical Industry is Using AI
May 12, 2023
Read Time 3 MIN
Industry-leading pharmaceutical firms are adopting artificial intelligence (AI) to drive value for the future of their enterprise. AI is currently being implemented within the industry to reduce human error, streamline processes and analyze data to develop new pharmaceuticals. As a result, AI has the potential to improve patient outcomes, lower costs for industry participants, and revolutionize the pharmaceutical industry.
Several companies in the VanEck Pharmaceutical ETF (NDQ: PPH) are currently integrating AI into their operations. These companies are at the forefront of the AI revolution. This blog will address how Johnson & Johnson, Novartis, and AstraZeneca implement artificial intelligence and illustrate how they intend to utilize this technology to transform the industry.
Using AI to Drive Better Patient Outcomes
The American multinational firm Johnson & Johnson (NYSE: JNJ) is well-known for being one of the largest global suppliers of pharmaceuticals and medical devices. They have been investing in AI to expand their capabilities. Verb Surgical is a project born from a collaboration with Verily Life Sciences LLC that is making strides in integrated robotic surgery. The system gathers and analyzes vast amounts of data to guide surgeons toward better patient outcomes by potentially reducing human error.
Johnson & Johnson is also utilizing AI to enhance their diagnostics abilities. Janssen Research & Development is one of Johnson & Johnson's subsidiaries that has combined forces with WinterLight Labs to develop an audio receptive AI platform designed to analyze speech patterns. This technology has been created to offer patients faster diagnoses of neurogenerative disorders like Dementia and Alzheimer’s Disease.
Using AI to Reduce Drug Development Time and Cut Costs
Novartis (NYSE: NVS) signaled its commitment to the implementation of artificial intelligence by establishing an in-house AI innovation lab as well as an external partnership with Microsoft. This partnership is intended to leverage Microsoft’s AI technology to advance Novartis’s capabilities in personalized therapies for macular degeneration, cell and gene therapy, and drug design. By investing in AI, Novartis may be able to streamline its processes and reduce the time it takes to gauge efficacy and feasibility from years to weeks. If effective, this increase in efficiency could cut costs for the firm exponentially.
The AI Revolution is Underway in the Pharmaceutical Industry
The global pharmaceutical giant, AstraZeneca (NDQ: AZN), shows promise with their AI implementation strategy in drug development. Their partnership with BenevolentAI has amounted to the identification of several potential patient solutions. By using AI to analyze vast amounts of data, the two may be able to develop new drugs and therapies to treat chronic kidney disease and idiopathic pulmonary fibrosis at record pace and reduced costs. The direction is promising, the two have yet to develop a new drug entirely with AI, but a breakthrough like this could be on the horizon.
Several companies in the VanEck Pharmaceutical ETF (PPH) are currently integrating AI into their operations. These companies are the largest in the space and at the forefront of the AI revolution in healthcare. From Johnson & Johnson's AI advancements in robotic surgery and diagnostics to Novartis's AI-enhanced processes and AstraZeneca's AI-powered drug development, AI is being used to improve patient outcomes, reduce overall development costs and revolutionize the industry. As AI technology continues to evolve, we will likely see even more innovative and transformative applications of this technology in healthcare.
VanEck’s Pharmaceutical ETF offers exposure to the firms mentioned above and the 25 most prominent names in the space. The fund seeks to track a rigorous index that provides pure-play exposure to the industry (the Fund’s index is the MVIS US Listed Pharmaceutical 25 Index, which tracks the overall performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well a production, marketing and sales of pharmaceuticals). The most prominent companies in the sector are the ones that can materially invest in artificial intelligence as early adopters and reap the benefits of innovation.
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Important Disclosures
Sources: JNJ.com, Novartis.com, AstraZeneca.com, as of 5/03/2023.
This is not an offer to buy or sell or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
An investment in the Fund may be subject to risks which include, among others, risks related to investing in the pharmaceutical industry, equity securities, depositary receipts, special risk considerations of investing in European and United Kingdom issuers, foreign securities, foreign currency, small- and medium-capitalization companies, issuer-specific changes, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and industry concentration risks, all of which may adversely affect the Fund. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund's returns. Small- and medium-capitalization companies may be subject to elevated risks.
MVIS US Listed Pharmaceutical 25 Index is the exclusive property of MarketVector Indexes GmbH (a wholly owned subsidiary of Van Eck Securities Corporation), which has contracted with Solactive AG to maintain and calculate the Index. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards MarketVector Indexes GmbH, Solactive AG has no obligation to point out errors in the Index to third parties. The VanEck Pharmaceutical ETF is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH and MarketVector Indexes GmbH makes no representation regarding the advisability of investing in the Fund.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
©️ Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
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Important Disclosures
Sources: JNJ.com, Novartis.com, AstraZeneca.com, as of 5/03/2023.
This is not an offer to buy or sell or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
An investment in the Fund may be subject to risks which include, among others, risks related to investing in the pharmaceutical industry, equity securities, depositary receipts, special risk considerations of investing in European and United Kingdom issuers, foreign securities, foreign currency, small- and medium-capitalization companies, issuer-specific changes, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and industry concentration risks, all of which may adversely affect the Fund. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund's returns. Small- and medium-capitalization companies may be subject to elevated risks.
MVIS US Listed Pharmaceutical 25 Index is the exclusive property of MarketVector Indexes GmbH (a wholly owned subsidiary of Van Eck Securities Corporation), which has contracted with Solactive AG to maintain and calculate the Index. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards MarketVector Indexes GmbH, Solactive AG has no obligation to point out errors in the Index to third parties. The VanEck Pharmaceutical ETF is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH and MarketVector Indexes GmbH makes no representation regarding the advisability of investing in the Fund.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
©️ Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.