Deloitte report unveils $5–7 billion AI life sciences opportunity
In the life sciences industry, transformative value can be realized by harnessing the power of AI in research, manufacturing, and commercial functions.
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By - In a recent report by Deloitte, it has been estimated that the life sciences industry has the potential to unlock a staggering $5–7 billion in value through the application of artificial intelligence (AI). The study indicates that almost 90% of this value can be derived from three key areas: research and development (R&D), manufacturing and supply chain, and commercial functions.
Over the past 18 months, Generative AI (GenAI) has significantly expanded the possibilities for AI implementation in the life sciences sector. Deloitte's study, which examined 20 end-to-end AI use cases, demonstrates how these cases, when linked together, can revolutionize value streams across various functional areas such as product launch and clinical development. According to the report, "Generative AI (GenAI) has broadened the breadth of value that AI could deliver."
"We estimate a top 10 biopharma company with average revenue of $65–75 billion could capture between $5–7 billion of peak value by scaling the use of AI over 5 years," states the report. The specific value captured would vary based on organization size, with companies earning around $35 billion in revenue expected to achieve $2.5–3.5 billion in peak value.
Discussing the breakdown of value creation by function, the report highlights that "R&D represents the top value opportunity at 30–40%." The industry can achieve cost savings and revenue uplift by applying AI to novel drug identification and accelerating drug development. The commercial functions also present significant potential, accounting for 25–35% of value, where AI can optimize marketing costs and enhance activities such as script utilization.
To address the potential of GenAI, the report emphasizes the need to separate hype from reality. It states, "Our experience suggests that there is realizable value from GenAI. But, it’s critical for companies to separate hype from reality to best understand the true impact GenAI could deliver."
The report also debunks myths surrounding GenAI and explains the timing of value realization.
"Typically, cost reductions are likely to occur within 1–2 quarters of deployment primarily from efficiency gains and cost avoidances. Revenue gains could take 3–4 quarters to materialize."
The Deloitte report underscores the immense potential of AI and Generative AI in the life sciences industry. By harnessing the power of AI across R&D, manufacturing, and commercial functions, companies can unlock billions of dollars in value while driving efficiency, cost reduction, and revenue growth. The report states, "Our experience suggests that there is realizable value from GenAI."
Organizations must adopt a pragmatic approach, starting with targeted initiatives that yield quick wins while paving the way for broader AI adoption in the future.
