Data hunters will be Big Pharma’s next prey

Scientists work at a laboratory south of Cambridge, Britain, March 12, 2021. REUTERS/Dylan Martinez

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LONDON, Dec 20 (Reuters Breakingviews) – Big Pharma will need to tool up in the data arms race. Drug giants like AstraZeneca (AZN.L) are pouring $160 billion a year into unearthing new treatments. Artificial intelligence could provide a shortcut, by helping discover new treatments and getting them to market sooner. That makes firms like Exscientia (EXAI.O), Relay Therapeutics (RLAY.O) and Recursion Pharmaceuticals (RXRX.O) hot property.

The pandemic has given a tangible example of the value of machine learning, a kind of computer programme that processes vast amounts of data quickly and spots trends that humans might miss. Technicians at UK-based BenevolentAI realised by running patients’ medical history and previous trial results through their algorithms that Baricitinib, an arthritis treatment, might also help Covid-19 sufferers.

Machine learning could help drugmakers develop new remedies, not just rebadge old ones. Take gene therapy, which involves tinkering with patients’ DNA to prevent diseases such as cancer. By analysing millions of potential patients’ genetic codes and medical history, an artificial intelligence programme could identify those most likely to benefit from a treatment. That could mean faster trials and more efficient drugs.

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Time is money in the pharmaceutical industry. It can currently take as long as 10 years to get a drug developed, tested, approved and on the market. That leaves perhaps just another 10 years before patents expire and other drugmakers can copy it. But pharma executives reckon machine learning tools could get a treatment to market two years earlier, implying 12 years before loss of exclusivity, or 20% more revenue over a drug’s life.

Big Pharma is already busily buddying up with artificial intelligence tech firms. Pfizer (PFE.N), for example, is working with IBM Watson to develop cancer treatments. Yet companies will increasingly need to bring machine learning technology in-house to fully analyse data and secure proprietary access to the results.

Several machine learning specialists have listed in recent years. And UK group BenevolentAI merged with a Dutch blank-cheque company founded by Michael and Yoel Zaoui. The combined market value of Exscientia, Schrodinger (SDGR.O), Relay, Recursion, BenevolentAI and AbCellera Biologics (ABCL.O) is less than $16 billion, equivalent to just one-tenth of Big Pharma’s annual R&D costs. Given the potential benefits, it’s unlikely those companies will stay independent for long.

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(This is a Breakingviews prediction for 2022. To see more of our predictions, click here.)


– British healthcare technology firm BenevolentAI said on Dec. 6 it will merge with Odyssey Acquisition, an Amsterdam-listed special-purpose acquisition company founded by investment bankers Yoel and Michael Zaoui. BenevolentAI uses artificial intelligence to accelerate drug discovery.

– Drugmakers globally spend $160 billion on new research and development each year, according to the Association of the British Pharmaceutical Industry.

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Editing by Neil Unmack and Oliver Taslic

Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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