Game-changing developments are reshaping healthcare and investment opportunities.
In our most recent Disruptor Series episode on healthcare, we explored advances in genomics and medical technology powered by accelerated computing and artificial intelligence (AI). This progress is reshaping the patient lifecycle: pre-diagnosis, diagnosis and treatment. And it’s reshaping the opportunity set for investors.
Yesterday’s healthcare was, in a word, reactive. Pre-diagnosis, the identifying of potential health issues and risks, focused largely on screening for symptoms. Preventative care was limited to things like routine physical exams and basic blood tests. By the time doctors diagnosed risks, diseases were often advanced, posing big disadvantages for the treatment stage.
Pre-Diagnosis Today: Insights from Genetics
Genomics—the study of an individual’s DNA—is reshaping the healthcare lifecycle. The analysis is very complex, requiring massive computing power. Each person’s body has about three billion base pairs, and generating insights requires comparing one person’s genome against vast numbers of others.
But in contrast to the $3 billion price tag and 13-year journey of the groundbreaking Human Genome Project, this work has become dramatically cheaper and faster. As the technology of reading DNA has improved, the cost of reading the human genome has declined from hundreds of millions of dollars just over 20 years ago to only hundreds of dollars today, as measured by National Human Genome Research Institute.
Analyzing that data is powered by accelerated processing and AI, yielding genetic insights that may suggest which diseases an individual might be more likely to have. That speeds identification, intervention and treatment. Pharmaceutical solutions are part of that treatment, and genomic advances yield information on how individuals might respond to certain drugs.
In diagnostics and screening, genomic insights enable bloodwork to be a minimally invasive testing procedure in areas including prenatal care and cancer screenings. Medical technology, such as wearables, capture health data, empowering individuals and their doctors to understand how lifestyle management factors into disease prevention and progression.
Targeted Diagnostics and Sharper Images
Genomic medicine is also driving transformation in healthcare diagnostics, for example enabling researchers to identify the exact genome of a virus, pathogen or bacteria to develop highly targeted diagnostic tests faster and cheaper. The diagnosis of cancer is also becoming more sophisticated.
Medical imaging—think MRIs, CT scans and ultrasounds—has been around for a while. But accelerated computing and AI enable radiologists to identify abnormalities faster and more accurately through models trained on tens of thousands of images. And they’re fostering rapid advances in radiopharmaceutical drugs, which bind to cancerous tissues to make them more visible on scans.
A Swelling Drug Pipeline…and Robotics
How are accelerated computing and AI enhancing medical treatment? Genomic insights are having a huge impact on the new drug pipeline. As costs have fallen, a wave of new treatments is filling biotech pipelines, aimed at pursuing the genetic basis of disease in more targeted and effective ways.
Cheaper and faster analysis helps in testing new treatments, too, making clinical drug trials more targeted and efficient. By sequencing patient genomes, researchers can identify genetic variants and biomarkers to find subgroups of people more likely to respond to a specific drug.
Robotics are improving surgery, making much smaller incisions and causing a lot less tissue damage. The shorter recovery times and fewer complications this entails improves patient outcomes. And less time in the hospital helps tamp down overall health system costs.
What the Future Might Hold for Healthcare
What’s next for healthcare as the price of genomics and DNA sequencing continues to fall with the help of accelerated computing and AI as well as more sophisticated medtech?
Here are just a few examples. In diagnostics, work is under way to map cancerous tumor cells more precisely and to better understand what’s driving them. Researchers are also working with microbes—all 100 trillion of them in the human body—for insights on how each mix influences individual health.
On the treatment front, pharmaceutical companies are working on vaccines to target a tumor’s specific genetic composition, in a sense using them to recode the immune system. The next step, with the help of leading-edge medical technology, is to extract a person’s immune cells, modify and re-inject them, essentially creating a new immune system to target disease.
What All This Means for Investors
Decades of plummeting computing cost opened huge markets and shifted investment opportunities, including semiconductor companies, internet service providers, software as a service, social media and ride sharing. DNA sequencing is having a similar impact—even though we’re only 20 years in and the cost still has the potential to fall further. The shifting opportunities, in our view, create potential for active investors.
The sheer volume of genomic sequencing being created is fueling a wave of new applications, and we think investors should seek out the companies that are enabling those use cases. Dig into these applications and the firms involved in all stages of those value chains.
For example, firms developing DNA sequencing require many tools and involve numerous value-add steps, driving demand for instruments such as lab automation equipment. And once they have the genetic code, it’s still necessary to understand how that gene leads to disease through biological processes. These processes are analyzed via other technologies like mass spectrometry, advanced microscopy and nuclear magnetic resonance. Accelerated computing craves data to crunch for genomic insights, so there’s much activity to facilitate that need.
As progress in cell-based therapy yields more—and more complex—drugs, specialized bioproduction firms are making them. And companies that are experts in running clinical trials are in demand. Big pharmaceutical and biotech companies are spending to build out in-house genomic capabilities and databases, using ever-expanding computing power to glean better insights. Miniaturization, with its tinier sensors and devices enabling less invasive procedures, is fueling growth for medical device companies.
From the big picture, rapid gains in areas such as genomic research, medtech, and AI and accelerated computing are redefining healthcare—leading an evolution from mass medicine to individualized care. If this continues to drive earlier understanding of health risks, faster ways to intervene and more effective and targeted solutions, we believe that the industry will continue to improve outcomes for patients and astute investors alike.
AB’s Disruptor Series is designed to provide distinctive perspectives on critical issues facing the capital markets today.
