A new Accenture study makes some smart, surprising arguments.

By Clifton Leaf and Sy Mukherjee
June 19, 2017

Of all the places where artificial intelligence is gaining a foothold, nowhere is the impact likely to be as great—at least in the near term—as in healthcare. A new report from Accenture Consulting, entitled Artificial Intelligence: Healthcare’s New Nervous System, projects the market for health-related AI to grow at a compound annual growth rate of 40% through 2021—to $6.6 billion, from around $600 million in 2014.

In that regard, the Accenture report, authored by senior managing director Matthew Collier and colleagues, echoes earlier assessments of the market. A comprehensive research briefing last September by CB Insights tech analyst Deepashri Varadharajan, for example—which tracked AI startups across industries from 2012 through the fall of 2016—showed healthcare dominating every other sector, from security and finance to sales & marketing. Varadharajan calculated there were 188 deals across various healthcare segments from Jan. 2012 to Sept. 2016, worth an aggregate $1.5 billion in global equity funding.

But the Accenture report suggests—and, I think smartly—that the biggest returns on investment for healthcare AI are likely to come from areas where the density (and dollar value) of deals isn’t that substantial right now. In terms of startup and deal volume, for instance, two hotshot areas have been medical imaging & diagnostics and drug discovery. Accenture’s analysis, though, points to 10 other AI applications that may return more bang for the buck.

Top of the list of investments that will likely pay for themselves (and then some) is robot-assisted surgery, Accenture says. “Cognitive robotics can integrate information from pre-op medical records with real-time operating metrics to physically guide and enhance the physician’s instrument precision,” explain the report’s authors. “The technology incorporates data from actual surgical experiences to inform new, improved techniques and insights.” The consultants estimate that the use of such surgical technology, which includes machine learning and other forms of AI, will result not only in better outcomes but also in a 21 percent reduction in the length of patient hospital stays. They estimate such smart robotic surgery will return $40 billion in “value,” or “potential annual benefits…by 2026.”

The second valuable use of AI, they project, will come from virtual nursing assistant applications ($20 billion in value)—which, in theory, will save money by letting medical providers remotely assess a patient’s symptoms and lessen the number of “unnecessary patient visits.” Next in line are intelligent applications for administrative workflow (worth $18 billion), fraud detection ($17 billion), and—fascinatingly—dosage error reduction ($16 billion).

“As these, and other AI applications gain more experience in the field, their ability to learn and act will continually lead to improvements in precision, efficiency and outcomes,” say the authors. It’s a compelling argument.

More news below.

Clifton Leaf, Editor in Chief, FORTUNE
@CliftonLeaf
clifton.leaf@fortune.com

DIGITAL HEALTH

The world’s smallest pacemaker is being tested out in space. Micra, a device which manufacturer and medical device giant Medtronic calls the world’s smallest pacemaker (it’s a one-inch long product that doesn’t contain any leads), is being sent to the final frontier to examine how it’s affected by high radiation and low temperatures during space flight. The idea was proposed by a Nebraska high school student named Shelbi Klingsporn as part of a private education program partnership with NASA and is now being supported by Medtronic. A firm senior program manager, Wade Demmer, says that the research will provide important insights into how well Micra stands up to the unique demands and conditions of space. “This is a once-in-a-lifetime learning opportunity for us,” he said in a statement. “The flight conditions go beyond what we test for on Earth. The idea that we might learn something that could impact the future of medical device development is very exciting.”

There’s a “Tinder” for… scientific abstracts. In perhaps the ultimate example of 21st century social technology seeping into the sciences, there is now a Tinder-inspired app for life science “preprints,” or the abstract/topline information presented in scientific literature. As with Tinder, scientists who use the app (called “Papr”) will be able to swipe left or right based on whether or not they like the, err, prospective paper. The algorithm would then begin showing preprints that the users are more likely to be interested in, and could even help introduce scientists to potential collaborators. (Nature)


INDICATIONS

Clovis stock soars as trial results portend bigger sales for cancer drug. Shares of cancer-focused biotech Clovis Oncology soared nearly 50% in early Monday trading on the strength of clinical trial results for its ovarian cancer treatment Rubraca. In a 564-person trial, patients whose ovarian cancer recurred (and who had already started treatment with chemotherapy) given Rubraca, part of a new class of cancer drugs called “PARP” inhibitors, lived, on median, for double the amount of time without their disease getting even worse compared with those given a placebo. And the results were evident in patients with a variety of genetic mutations, meaning that the medicine’s market could expand substantially if Clovis wins an expanded label for Rubraca. That also puts the pressure on competitors like Tesaro who are also working in the PARP inhibitor field. (Fortune)

Billionaire John Paulson joins Valeant’s board. Valeant’s largest shareholder, billionaire and hedge funder John Paulson, has gained a seat on the drug maker’s board, sending the beleaguered company’s stock spiking more than 6% in Monday trading (although it’s still hovering at around the $13 mark). Valeant is currently attempting a massive restructure and debt payoff, including by focusing on key portfolios like its gut, skin, and eye drug franchises. Paulson’s hedge fund owed a 5.68% stake in Valeant at the end of March. (Fortune)

Novartis nabs another biosimilar approval. Add another milestone to Novartis generic unit Sandoz’s quest to stake a major claim in the biosimilar market: the company won its fourth marketing approval for a cheaper copycat (Rixathon) of a pricey biologic drug in Europe, this time for Roche’s massively successful cancer and autoimmune treatment Rituxan. That could spell further trouble for Rituxan manufacturer Roche, which has seen a number of companies win European approval for biosimilars of some of its best-selling products. “Sandoz is committed to increasing patient access to biologic medicines, and Rixathon will be one of the five major launches we plan in the next four years,” said Sandoz’s global biopharma head Carol Lynch in a statement.


THE BIG PICTURE

The Amazon-Whole Foods deal hit pharma stocks, too. The business world was taken aback last Friday by tech giant Amazon’s surprise $13 billion-plus deal to buy health food chain Whole Foods. But it wasn’t just grocery stores feeling a stock pinch the day the deal was announced. In fact, shares of major pharmacy chains like CVS and Walgreens, as well as of drug distributors and benefits managers like McKesson and Express Scripts, also dipped significantly on the news. The probable reason? Fears that the retail shelf space coming with the Whole Foods buyout could make it easier for Amazon to carry through on its reported plans to branch into the pharmacy and drug delivery business. (Fortune)

More whisperings on the Senate’s health bill: An even bigger cut to Medicaid? The debate over legislation to overhaul Obamacare is getting increasingly heated, with Senate Democrats reportedly planning to gum up the works in the Senate as much as possible to protest the GOP’s secretive approach to drafting the legislation (there is still no bill text available). In the meantime, a group of House lawmakers has sent a letter to Majority Leader Mitch McConnell demanding four major conservative tents to remain in place in any bill—and on one issue, they may get their wish. The Hill reports that a possible Senate provision would actually gut Medicaid even more than the House-passed American Health Care Act does (and that legislation hacks some $830 billion from the health program for the poor). If that’s true, it may face a tough road to approval from Senate GOP moderates, who have already expressed concerns over huge Medicaid cuts. (The Hill)

CDC: 1,300 children die each year from gun violence. A new Centers for Disease Control report finds that nearly 1,300 American kids (those who are under the age of 17) are killed by firearms every year, and that about 5,800 are injured by gunshot wounds. “Firearm-related deaths are the third leading cause of death overall among U.S. children aged 1 to 17 years, surpassing the number of deaths from pediatric congenital anomalies, heart disease, influenza and/or pneumonia, chronic lower respiratory disease, and cerebrovascular causes,” wrote the CDC in its report.


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