Re-inventing

Pharma with
Artificial
Intelligence
Three steps for
pharmaceutical
companies to
seize the $250bn
AI value potential
in the future
of health
Contacts
Austria Dr. Thomas Solbach Thalita Marinho
Matthias Schlemmer Partner, Strategy& Germany Partner, Strategy& UK
Partner, Strategy& Austria +49-170-2238-477 +44-7900-163-439
+43-664-5152-939 [email protected] [email protected]
[email protected]
Switzerland United States
Germany Matthias Leybold Ronald Chopoorian
Dr. Christian Kaspar Partner, PwC Switzerland Partner, PwC United States
Partner, Strategy& Germany +41-58-792-1396 +1-973-449-6042
+49-170-9362-692 [email protected] [email protected]
[email protected]
United Kingdom Philip Sclafani
Dr. Jens Neumann Colin Light Partner, PwC United States
Partner, Strategy& Germany Partner, Strategy& UK +1-631-767-2540
+49-172-2337/689 +44-7782-329-322 [email protected]
[email protected] [email protected]

About the authors

Dr. Christian Kaspar is a partner with Johannes Dizinger is a manager
Strategy& Germany leading the Digital and with Strategy& Switzerland and is
Technology Strategy practice in Europe. based in Zurich. His expertise lies
Based in Munich, he advises clients in the at the intersection of pharma and
pharma, MedTech and healthcare industries life sciences, technology, data
on IT transformation projects, technology analytics, AI and digital strategy.
innovations, as well as data and
AI strategies. Jonathan Müller is a manager with
Strategy& Germany. Based in Hamburg,
Dr. Thomas Solbach advises clients his focus topics include data-driven
in the healthcare and life sciences transformation and business model
industry globally. He leads the pharma innovation, particularly in the life
and life sciences practice at Strategy& sciences and digital health industry.
Europe. Based in Frankfurt, he is a
partner with Strategy& Germany. Christelle Azar is a senior associate
with Strategy& Germany. Based in
Hans-Fabian Ahrens is a manager Berlin, she advises clients on topics
with Strategy& Germany, based in around technology and data as well
Hamburg. He supports clients as AI with a focus on the pharma and
predominantly within the pharma- life sciences industry.
ceutical sector around technology,
data, analytics, and AI strategies.

To discover all pharma use cases that

were considered in this study and many
more, including many demo videos,
explore PwC’s AI use case compass:
pages.pwc.de/applied-ai-compass-app/
EXECUTIVE SUMMARY

Pharma races to seize the $250bn AI opportunity

We expect the future of pharma and healthcare to be personalized and digital, with increasingly
blurred boundaries between prevention and treatment. Artificial intelligence (AI) is accelerating
this convergence of pharma, broader healthcare, technology and consumer products and
generates great benefits for each sector. Pharmaceutical companies can lead the way and
incorporate AI into new products and services directly, or profit indirectly by using AI to make
processes more productive and efficient. The focus of this report is the indirect value from AI
and the respective AI use cases.

In the last year, most pharmaceutical companies focused on understanding the impact on their
business from AI and prioritized specific use cases that would help them stay ahead. As such,
we based our research on an analysis of more than 200 AI use cases with 25 experts and
thought leaders from healthcare, pharma, and technology with the following results:

• Pharma companies that industrialize AI use cases across their organizations have the
potential to double their operating profit in 2030

• AI use cases in operations account for 39% of the impact by boosting efficiency on the
production, material, and supply chain costs

• R&D accounts for 26% of the impact, followed by commercial at 24%, with AI increasing
efficiencies in developing new medicines and opening up new ways of interaction

• Pharma’s enabling functions contribute 11%, with AI increasing the speed and efficiency
of supporting processes such as IT, finance, HR, and legal and compliance

• In total, pharma companies could gain an additional $254bn in annual operating profits
worldwide by 2030, assuming a high degree of industrialization of AI use cases; the
additional AI value would include $155bn in the US and $33bn in Europe (EEA, Switzerland,
and the UK)

• We expect that AI will exceed this impact in research beyond 2030 by far, leading to an
even higher divide between AI leaders and followers in terms of revenues and value
chain efficiencies

Strategy& | Re-inventing Pharma with Artificial Intelligence 1

Our observations show that a major share of the industry is already getting started and has
agreed on high priority AI use cases. But only very few companies are successful at
operationalizing selected use cases at scale. We identified three critical steps that pharma
companies should follow in order to realize the full AI potential:

1
Pharmaceutical companies need to assess and build
organizational structures to execute their priorities fast.
So far, hybrid delivery models with cloud hyperscalers
and an implementation partner are delivering faster
than internal, IT-led or vendor-led constructs.
Organize for
delivery

2
The creation of processes for incubating innovation
and the setup of dedicated teams to experiment
with the rapidly evolving models and adjacent
technologies (e.g., LLM Ops platforms) is separating
leaders from followers.
Establish
incubators

3
As AI products are delivered, the way that business
is executed will fundamentally change with great
impact on the workforce. Products only capture value
if they are used with responsibility and impact.
Top-down programs are required to address concerns
ROI follows and drive adoption.
adoption

Pharma companies that industrialize AI use cases across their

organizations have the potential to double their operating profit
in 2030. For now the greatest impact will occor on operations.
Beyond 2030, pharma will be re-invented with AI-powered R&D.”

Dr. Christian Kaspar in Handelsblatt, March 2024

2 Strategy& | Re-inventing Pharma with Artificial Intelligence

 SECTION 1

AI will generate significant value across the pharma

value chain
With AI disrupting the broader healthcare industry and holding immense potential for the future,
there are different ways for pharmaceutical companies to unlock value (see Exhibit 1): On the
one hand, AI-enabled products and services disrupt and complement current pharmaceutical
business models. We also refer to this pathway as “direct AI value” (see section three for
an outlook). On the other hand, AI enhances existing business models and value chains by
increasing synergies, improving outcomes, boosting revenues, and saving costs within the
pharma business model. This pathway, which we also refer to as “indirect AI value”, is in the
focus of this study.

EXHIBIT 1
AI value realization for pharmaceutical companies

Indirect AI value inside the pharmaceutical company Direct AI value in the pharmaceutical ecosystem
AI-based enhancement of existing business model Monetization of AI-centered products and/or services
by enhancing pharmaceutical value chain including new business model

Research and development Algorithm-as-a-service

Manufacturing and operations Digital therapeutics

Go-to-market and commercial Digital diagnostics

Enabling functions Integrated treatment solutions

Cost savings Revenue uplift

Focus of this study

Source: Strategy& analysis

Strategy& | Re-inventing Pharma with Artificial Intelligence 3

EXHIBIT 2
Overall profit potential from indirect AI value realization in 2030 (showing top three use cases only)

AI use cases operating profit impact (percentage point increase)

2.3
+20.2
100%
AI-driven performance
improvement potential
4.9

7.8

5.2
20.0

Disease area Production Patient Value tree

focus scheduling segmentation
analysis
optimization optimizer and identification

Predictive Patient advisor Auto-generating

Target
quality and treatment and validating
discovery
management adherence reports

Production Commercial Code generation,

Drug analytics and
output documentation,
repurposing market trend review
optimizer
analysis
Operating Operating
margin Research and Enabling margin
Operations Commercial
baseline development functions potential

Source: Strategy& analysis

For this study, we investigated over 200 use cases that leverage AI from our industry experience
and past client projects. The use cases were evaluated for their indirect value contribution
to a typical innovative pharmaceutical company with an operating margin of 20%. Each use
case was connected to baseline elements of a pharma profit and loss (P&L) baseline. We
interviewed 25 experts and thought leaders from healthcare, pharma, and technology who
estimated the range of impact that each use case would have on the P&L elements when fully
implemented. Some steps in the pharmaceutical value chain had more use case possibilities
than others. We therefore added a marginal utility function to model the decreasing benefits of
additional use cases for each process. In addition, the interviewees evaluated the degree to
which the cases will disrupt existing business and operating models and the cases’ feasibility
of implementation.

4 Strategy& | Re-inventing Pharma with Artificial Intelligence

 AI use cases in operations account for 39% of the impact as they affect the greatest cost
baseline including production, material, and supply chain costs. Research and development
(R&D) accounts for 26%, closely followed by commercial with 24% – at both, AI does not only
increase efficiency but also revenues by shaping new medicines and new ways of interaction
with the market. Enabling functions contribute another 11% of the potential by driving speed
and efficiency in supporting processes such as IT, finance, HR, and legal and compliance.

Overall, pharma companies that industrialize AI use cases completely across their organizations
have the potential to double today’s operating profits by boosting revenues and reducing costs.
We expect that this industrialization process will begin to be fully realized by companies
prioritizing AI by 2030. Our model also takes into account different speeds of AI adoption, with
the US leading the way, followed by emerging markets, and Europe.

In total, pharma companies could gain an additional $254bn in operating profits worldwide
by 2030, assuming a high degree of industrialization of AI use cases. This additional AI value
would include $155bn in the US, $52bn in emerging markets, $33bn in Europe and $14bn
in remaining countries. This extrapolation is based on a 5.7% CAGR of the pharmaceutical
industry without the effects of AI.

EXHIBIT 3
Global distribution of the AI value potential

33 bn USD
AI EU

52 bn USD
AI Emerging Markets

155 bn USD
AI US

254 bn USD
AI Global

Source: Strategy& analysis

Strategy& | Re-inventing Pharma with Artificial Intelligence 5

AI value in research and development
R&D is crucial for innovative pharmaceutical companies to maintain competitiveness. It enables
timely market entry of innovative drugs to secure first-mover advantage, capture market share,
and generate revenues. The key levers for research success are to be the “first-in-class” or to
be “best-in-class” for a modality. While companies today can forecast development timelines,
the probability of success for clinical development is hard to predict. In clinical development,
taking the new medicine at speed and cost to the market is key for commercial success.
Looking at the declining return on investment, R&D is in dire need for an AI re-invention.
Structured decisions to in-source or outsource and clear triggers for stopping clinical trials are
rare today and realizable with AI. The trend toward more personalized (AI-enabled treatments
implies that the patient populations being targeted are becoming smaller, which adds to the
strain on R&D to increase performance on budget.

AI presents multiple opportunities to address these R&D challenges. The potential of AI to

accelerate drug discovery is demonstrated by Merck’s AIDDISON, an innovative drug discovery
SaaS platform that screens a 60 billion pool of compounds and suggests ways to synthesize
the new drug.1 Separately, researchers examined deep learning models on the Chemprop AI
platform to unveil the first new structural class of antibiotics that has been discovered in
decades.2 In our analysis, research and pre-clinical AI use cases account for 18% of the overall
operating profit potential, mainly because they include strong revenue drivers. We believe that
AI will eventually be able to predict the success of compounds in the years to come more
accurately and our use cases, such as the optimization of disease area focus (2-29% of overall
AI potential) and AI-target discovery (5-14%) reflect this potential. AI models not only be able
to predict the properties, effectivity, or toxicity of new compounds, but also discover novel
effect mechanisms and APIs. AI algorithms are able to collect, transform, aggregate and make
use of much more data than was ever possible before. However, AI use cases face some
hurdles due to factors such as limitations of current protein docking simulations/in-silico
models, confined translational science advancements and complexity of pharmacokinetics
(PK) and pharmacodynamics (PD) in the human body, resulting in the clear need to apprehend
potential and limits of use cases.

For pharma development, AI use cases can both accelerate the trial process and inform critical
trial design and gate decisions, such as in- or outsourcing and, if relevant, principal investigator
(PI) and site selection. So far, pharma companies mainly use AI to drive operational excellence
in within trials, like Amgen applying their Analytical Trial Optimization Module (ATOMIC).3
However, other use cases also take a quite prominent rank in our analysis, e.g., the usage of
synthetic data to create entirely simulated patient populations (3-6% of overall value potential)
and the enhancement of patient experience during trials with AI-based automation and
personalization (2-4%), or the orchestration of multiple and decentralized trials. Overarchingly,
AI will act as a support for any repetitive task in R&D such as automated document and text
creation for lab notebooks, health records, and regulatory submissions whilst increasing speed
and output of affected teams.

Pharmaceutical companies can leverage these use cases by enhancing their processes with
AI-based R&D software such as Schrödinger or Verge Genomics, sourcing the necessary data
und upskilling their R&D departments. In other cases, such innovative AI companies build their
own drug pipeline around their algorithms such as Exscientia or Insilico Medicine, which have
then facilitated new partnerships and investments by big pharmaceutical companies.
Nonetheless, the overall complexity of AI-powered R&D and the level of disruption that it
brings for internal processes remains high.

6 Strategy& | Re-inventing Pharma with Artificial Intelligence

We expect AI use cases to start creating value with impact in development operational
excellence first. And while these results can be validated directly, AI-discovered drugs will
take longer time to prove their impact until they take a larger share in the portfolio of
pharmaceutical companies. In the future, we foresee that AI could truly re-invent research
in the long term by creating artificial patients and thereby minimizing risk for humans from
the development process. Until this breakthrough, the mentioned use cases most likely
payout for those willing to prioritize high AI investments and uplift their entire R&D ecosystem
with them.

AI value in operations
When looking at pharmaceutical operations we typically consider the domains of procurement,
production, quality and supply chain management. Operations plan and execute the supply
and distribution of high-quality products based on forecast demand. AI is a key driver of
more data-driven, measurable, and transparent decisions, especially once high portfolio and
manufacturing complexity and pressure from drug shortages is added to the mix.

Operations has the highest AI potential in the pharmaceutical value chain (39% of overall AI
potential) because related use cases can affect a large part of the costs of pharma companies.
Currently, adoption of AI in operations across industries remains relatively low, as many
applications require more data collection and changes to the manufacturing infrastructure.
Our analysis shows that many use cases can also be applied to existing facilities while only
requiring process or decision framework changes.

In procurement, automating catalog maintenance accounts for 3-5% of pharma’s overall

AI potential and AI indication of procurement risks constitutes 3-6% of the potential – both
reduce direct material cost in the long term.

Production has been an attractive area for AI application for years. For example, Sanofi
has partnered with Aily Labs to develop plai, an AI platform that supports manufacturing,
among other processes. The platform is helping Sanofi to optimize its use of raw materials,
contributing to the company’s environmental objectives and supporting improved cost
efficiency.4 In addition, optimization of manufacturing scheduling and output based on
AI sensing demand and supply needs is expected to deliver outstanding value, reducing
production costs by up to 10%, representing 5-11% of the overall value potential from AI.
Another case is the application of digital twins and predictive maintenance for facilities
(2-7%) that, for example, indicate when machine parts need replacing by analyzing vibrations
or voltage patterns and predicts stoppage.

The quality function has to deal with challenges in transparency on product quality,
cumbersome manual quality processes, and the difficulty of understanding the root causes
for issues. AI helps with multiple use cases such as predictive quality management (5-13%),
where deviations can be identified in time and occurred problems can be reviewed for root
causes automatically. AI generating quality documents, such as incident reports, adds 4-11%
to the overall AI value potential.

The most impactful AI use case for the supply chain is enhanced demand forecasts (5-12%
of the overall AI potential). As AI in the supply chain has to be applied to complex worldwide
production footprints, many examples are focused on specific subsets of the supply network.
Pfizer leverages AI in collaboration with Controlant to optimize inventory prediction, employing
a data tracking system that is compatible with GPRS signals for real-time monitoring of
vaccine and component deliveries.5

Strategy& | Re-inventing Pharma with Artificial Intelligence 7

Each use case individually has a fairly low level of complexity with limited internal disruption.
Some AI use cases, like predictive maintenance, have been around for years but have not been
implemented at scale yet. The challenge remains twofold in harmonization and prioritization:
Pharma operations are mostly fragmented by regions, technology, processes, and operating
model setups that are hard to optimize synchronously. Thus, the broad introduction of AI either
implies large transformation programs or selected implementation for new or refurbished sites.
Despite these challenges, we recommend making the use of AI in pharmaceutical operations a
priority because of its large potential.

AI value for go-to-market and commercial

The commercial success of pharmaceutical products largely depends on the right strategy,
including pricing and market access, and sales and commercial models. AI can help to provide
the insights to support strategic decisions and day-to-day operations.

On a strategic level, enhanced accuracy from commercial analytics and market trend analysis
is a major driver for increased revenue (2-6% of overall AI potential). Scientific information
platforms that enable commercial users to navigate complex medical and regulatory
frameworks for market access strategies account for 2-5% of the AI value potential. For
example, large language models can be used here to let users query regulatory bodies while
other models can predict the success of submissions to the authorities.

In pricing, AI applicability is largely dependent on each market’s data availability and regulative
environment. Such differences are the main reasons for the different levels of value from
AI that pharmaceutical companies will see in different regions. AI can perform simulations
of reimbursement and pricing models to evaluate the impact of different scenarios on the
profitability of market access for pharmaceutical products. It can combine real world data on
patient populations with the data from clinical trials to deliver parameters for pricing models
that are optimized to appeal to payers. Payer contract terms and conditions can be generated
automatically, and pricing committee negotiations can be supported by AI assistants, leading
to optimized rebate agreements. Our analysis shows that different pricing use cases in total
make up for 4-9% of the AI potential until 2030.

For the sales and commercial function, AI can add value via both revenue and efficiency
levers: Virtual sales representatives streamline account management (2-5%), as well as
patient segmentation and identification (2-7%). Combined with patient advisory and treatment
adherence services (also 2-7%) and automated medical info response generation, revenues
can be boosted while saving capacity.

AI supports the sales force significantly: For example, AstraZeneca is showing how AI can be
deployed to improve customer service coaching for sales representatives. The AI model builds
on AstraZeneca’s existing field data to enhance customer interactions.6 Veeva‘s AI-powered
CRM platform is used by many pharma companies already – it enables them to deliver auto-
personalized marketing and promotional content to healthcare professionals (HCP) efficiently
and at scale.7 Realizing the AI value potential in commercial will be challenging, not only

8 Strategy& | Re-inventing Pharma with Artificial Intelligence

because of different market conditions for AI, but also because the ongoing internal data
quality issues limit AI use cases. At the same time, the AI use cases disrupt both business
and operating models as they change interactions with HCPs and internal processes and
will require new skillsets in commercial departments.

AI also plays a pivotal role in reshaping marketing strategies through enhanced customer
targeting, personalization and automated content generation, optimized marketing strategies
and competitor monitoring, as well as insightful predictive analysis and faster research.

The use cases for business development score better in terms of feasibility and are expected
to require fewer internal and external changes. Accordingly, these use cases should be
regarded as a priority if relevant. Overall, the AI re-invention of the pharmaceutical commercial
domain is quite comparable to other industries’ sales functions.

AI value in pharma’s enabling functions

Information Technology (IT): IT has a dual role in the AI reinvention. On the one hand, it is the
main enabler for the organization to use AI technology in the first place by providing tools,
talent, and training. On the other hand, IT capabilities and processes themselves are subject
to AI optimization. Two major fields of AI application in IT in our analysis were software
development and data engineering. Both are types of expressed, systematic language, that AI
can naturally take over at impressive quality and speed. AI as a “copilot” for developers and
data engineers can achieve efficiency gains between 10-30% on IT labor costs, enabling IT
departments to deliver more output and speed at the same cost.

At the same time, the overall process excellence of IT can be enhanced, for example for
bottleneck prediction at operations centers or with highly advanced chatbots for IT service.
Mundane tasks like data cataloging or IT asset inventory maintenance can be automated
to a large extent. Overall, we expect a share of over 3% of the overall AI potential to come
from IT use cases. AI can thus support the CIO in enabling AI success across the organization,
especially in times of increased cyber attacks and pressure on IT resilience due to a severe
shortage of talent.

Human Resources (HR): AI holds a high potential for HR in almost all areas of the employee
lifecycle, especially recruiting, workforce and talent management, and training. The biggest
challenge is harnessing this immense power to make processes more efficient and less
biased, while preserving the interpersonal element.

In the future, AI will support recruiters to create better job requirements, personalize their
reach-outs to candidates based on their preferences, and offer productive and efficient ways
to navigate all the incoming profiles. In recruitment, HR staff will be able to invest more time in
interpersonal communication, as AI takes over the mundane tagging of skills and experiences
from the unstructured data of candidates and other transactional volume drivers. Internally, AI
can support with unbiased candidate selection and the onboarding and training of new hires.

Strategy& | Re-inventing Pharma with Artificial Intelligence 9

In our analysis, experts reviewed 16 use cases, including automated candidate screening and
comparison, automated performance evaluation and predictive attrition modeling (summing up
to over 0.5% of overall potential).

While this seems low at first sight, the enhanced output, speed, and quality HR can gain has a
strategic and transformative importance. AI opens up another hard-to-fill talent gap for
pharmaceutical companies, and the existing workforce needs to be trained for AI skills – all of
that has to be realized with a next level employee experience to stay competitive. Thus, AI is
not only an opportunity for HR to be enhanced, but also a main field to act as an enabler.

Finance: Just like the other corporate functions, finance is both an enabler and profiteer of AI.
As an enabler, the CFO has to understand the impact of this technology on the value chain
and allocate resources to the most promising projects – including overarching initiatives such
as AI copilots. Within the finance organization, AI lets teams automate repetitive tasks, lets
them generate complex reports from only a short prompt, as well as it aggregates and analyzes
data for them. There are many use cases for the different finance capabilities that are worth
considering in this context.

Our experts identified three use cases in particular as especially impactful: Cashflow and
liquidity forecasting powered by AI reduces the time spent on manual analysis and optimizes
the working capital of the company (3-7% of overall AI potential). Forecasting accuracy is
improved by regularly retraining the prediction model from historic patterns. Identification
and ranking of critical value drivers can be automated and enhanced with AI. Finance teams
can leverage algorithms to swiftly analyze data, identify patterns, and determine which factors
influence business outcomes with the highest impact (3-7%). AI chatbots can answer
questions about datasets and document libraries, combining and processing data from
different sources. Currently, data search and analysis in treasury, accounting and controlling
is a largely manual and mundane task. We estimate that using AI chatbots for data searches
and analysis in finance can deliver 1-2% of the overall AI potential for pharma companies.

Indeed, we recommend treating the finance function as a focus area for AI among the enabling
functions, given that it accounts for 6% of the total AI value potential across the company.

Legal, compliance and ethics, and the internal audit function: More than 20 AI use cases were
analyzed in these areas, with significant benefits identified, especially from legal AI use cases
that reduced costs and optimized outputs. In total, these remaining AI-enabled functions
contribute 0.3% of the overall value potential. One compelling example for many pharmaceutical
companies is the generation, validation, and comparison of complex contracts with AI models.

10 Strategy& | Re-inventing Pharma with Artificial Intelligence

SECTION 2

Three steps to overcome challenges and realize

AI value
So far, the adoption and exploitation of AI by pharmaceutical companies to realize value lags
behind other industries such as financial services and retail, as a Strategy& study in 2023
showed.8 Key challenges include:

• The environment of pharmaceutical companies, including their research, development,

supply, and healthcare partners holds complex regulative limits, diverse levels of
digitization and data availability, and complex datasets and IT systems.

• Rapidly evolving technology and lagging regulatory environments for its application
to health- and pharma-related challenges. The recently passed European AI Act is one
example of regulation that classifies health-related AI applications as “high risk” and
thus raises the bar for realizing value in terms of AI explainability and accountability.

These challenges slowed down adoption in the past – newer and more forward-looking studies
suggest that health and pharma are closing the AI value gap in an accelerated way.9 Our
forthcoming study “Embracing the GenAI Opportunity” highlights how Generative AI gives even
inexperienced users access to advanced AI capabilities at scale.10 As a result, the introduction
and adoption of AI across the pharmaceutical value chain will accelerate even stronger.

The overall race to generate value from AI is a marathon stretching over the next decade.
Pharmaceutical companies that embark on the AI journey, need to get going and make their
AI strategies actionable, overcome data challenges, and seek functional partnerships to deliver
first use cases. However, we observe that a major share of the industry has started prioritizing
AI use cases. For them, there is a sprint ahead to deliver on the value promise of AI and invest
into speed. We identified three critical steps that the most successful pharma AI leaders are
executing this year in order to realize the full AI potential:

Only a few companies are successful at operationalizing AI at scale.

Leaders in the AI space organize for delivery, establish incubators, and
measure their value impact.”

Strategy& | Re-inventing Pharma with Artificial Intelligence 11

1. Organize for AI delivery
Building the right-fit organizational constructs to deliver AI to the business is the key constraint
that needs to be overcome by pharmaceutical companies. Vendor-led delivery models have
dominated the last years, especially for complex AI products, but have been challenged in-time
and on quality. Internal IT-led delivery is becoming more prevalent as many pharma companies
build their internal skill sets across cloud services and data science. However, there are
substantial challenges across resource quality, skill sets and experience to overcome. Currently,
hybrid delivery together with cloud hyperscalers and implementation partners has shown the
greatest speed in AI implementation due to the high complexity of many AI use cases. These
collaborations allow for the combination of diverse skillsets across the business functions
knowledge, software engineering, data science, and product delivery expertise, that all must
work in concert.

2. Establish incubators for innovation

The creation of a mechanism for incubating innovative solutions is separating the AI leaders of
tomorrow from the followers. This mechanism is a dedicated team with two main ingredients:
The first is a mandate to experiment with rapidly evolving models and adjacent technologies
(e.g., LLM-Ops platforms). The goal of this team is not to deliver solutions that assuredly
will be adopted or will deliver significant ROI. Their goal is to explore how technology can
be applied to business functions, assess whether scale-up is possible, and develop a core
8organization. The second key ingredient to this incubator is having the right combination of
roles and skills across backend and frontend engineering, data science, and product
management. Without one of these skillsets, it is a challenge to leverage technology in a way
that adds value to the business.

3. Embrace the AI-driven re-invention and lead adoption

As AI solutions are being built, they promise to fundamentally alter the way business functions
are executed, simplifying processes, enabling workers to focus on higher-value tasks, and
enhancing overall productivity. While these outcomes hold promise for executives seeking
cost savings and revenue generation, they also pose challenges in terms of workforce
adoption. Employees entrenched in daily operations may harbor resistance and fear towards
the impending changes to their roles. Hence, it becomes imperative for organizations to
implement top-down communication and upskilling programs that not only explain the
forthcoming changes but also highlight the benefits to individual workers, such as engaging
in more fulfilling and intellectually stimulating work. Additionally, it is crucial to recognize that
solutions only capture value if they are applied. Thus, these top-down programs are essential
not just to address worker concerns but also to ensure that the potential benefits (e.g., ROI)
of AI are fully realized throughout the organization by upskilling the workforce and ensuring
realization of value drivers.

12 Strategy& | Re-inventing Pharma with Artificial Intelligence

SECTION 3

AI drives the convergence of healthcare – Pharma’s

opportunity for direct value realization
For pharmaceutical companies, it is important to understand that the healthcare ecosystem
is currently changing at an accelerated pace, leading to a continued convergence of
different healthcare stakeholders. Our research11 shows that the future of pharma and
healthcare will be more personalized, digitized and preventive, with solutions seamlessly
integrated into daily life. By 2035, two areas of healthcare will converge: wellcare and
disease care will become integrated as LIFEcare, enabled by digital technologies. AI will
accelerate faster adoption, closer integration, more profitable outcomes for stakeholders
and better health for everyone.

Beyond the indirect value potential for pharma companies outlined above, AI has the
potential to transform each health industry sector with new AI services for consumers,
patients, and healthcare professionals and new market entrants (see Exhibit 4, next page):

• AI-powered consumer health solutions enable personal health tracking, virtual clinical
trials, and patient monitoring and education through apps, platforms, and devices
such as Whoop.12 AI underpins new types of remote health monitoring and support
such as Sense.ly which offers the virtual AI nurse Molly to support patients with
chronic conditions.

• AI transforms healthcare processes by reducing administrative and data handling tasks.

The average US doctor spends almost nine hours per week on administration,13 AI helps
to focus on value-adding work, devoting more hours to diagnosis and care.

• AI can outperform humans in pattern recognition for diagnosis and treatment. For
example, PREDICTioN2020 is a clinical decision support tool that lets doctors
compare stroke patients’ data with simulations.14 However, our collaboration with the
Osypka cardiovascular center showed that AI in diagnosis can be subject to bias
that needs to be addressed in the future15.

The broader healthcare ecosystem is changing at

an accelerated pace towards AI adoption. Pharma
companies can profit directly by deploying AI directly
in products and services, e.g., in digital health.”

Strategy& | Re-inventing Pharma with Artificial Intelligence 13

EXHIBIT 4
AI Accelerators for the LIFEcare system

Wellcare Disease care

AI accelerators

Wellness/Lifestyle Healthcare Pharmaceuticals

Consumer health Health monitoring Healthcare process Diagnosis and Drug discovery
solutions and support efficiency treatment and development

Manufacturing
and operations

Commercial and
go-to-market

Accelerators across industries and life stage

More data digitized, aggregated, and analyzed

Convergence of industries

New partnerships and intensified collaboration

Anonymization of sensitive data

Direct: Potential for standalone AI solutions Indirect: Potential to improve existing processes

Source: Strategy& analysis

14 Strategy& | Re-inventing Pharma with Artificial Intelligence

In addition, AI accelerates processes across all healthcare sectors and patient life stages
through:

• Unlocking value through more digitized, aggregated and analyzed health data: Generative
AI like BioGPT16 can turn unstructured HCP notes into structured datasets, and Ultivue with
Aignostics uses AI to help scientists in navigating proteomics data from genome sequencing.

• Accelerating convergence of industries: Google and Amazon have invested in the health
space for a long time, creating their own care and payor services along the way. Additional
to this direct participation their role as technology partners is critical for AI value17.

• Creating many new partnerships and revenue opportunities: One striking example is
OPTIMA, a European consortium of university hospitals, research institutes and pharma
companies. OPTIMA develops clinical AI-based decision support tools in oncology and
explores business models for oncology data processing and analysis.18 More examples
can be found in our blog article, “Data and Insights as a Service”19.

• Improving privacy and anonymizing sensitive data: Software such as Duality20 or PwC-
backed Statice21 helps to anonymize health data more rigorously or make it unnecessary
to share personal information at all with innovative concepts like federated training.

Equipped with access to data and stakeholders at several points as well as the more advanced
analytical and technical capabilities within this ecosystem, pharmaceutical companies are
uniquely suited to extend their role within the AI-driven LIFEcare system of the future. The
momentum of AI innovation in direct healthcare products and services by pharmaceutical
companies is immense. Patent filings involving AI almost doubled in 2023, with Takeda being
the most prolific applicant since 2020.22 To find out more on how to realize direct AI value, we
recommend our “Decode Digital Health” series.23

The AI race is not only a sprint but also marathon. Both quick wins and long-term AI value
realization are possible with precise priorities and bold investments. Pharmaceutical companies
should recognize the responsibility they hold both for the competitiveness of their offerings
and the immense potential that AI can unleash for human health. The integration of AI
technologies into all parts of the pharmaceutical value chain, products, and services can
re-invent healthcare and its surrounding ecosystem – pharmaceutical companies have the
unprecedented opportunity to lead the way.

“Pharmaceutical companies should recognize the immense potential

that AI offers and the opportunity for them to lead the way with direct
and indirect value realization.”

Strategy& | Re-inventing Pharma with Artificial Intelligence 15

ENDNOTES

1. https://www.prnewswire.com/in/news-releases/merck-launches-first-ever-ai-solution-to-
integrate-drug-discovery-and-synthesis-302003351.html

2. https://www.nature.com/articles/s41586-023-06887-8

3. https://www.amgen.com/stories/2022/10/follow-the-data

4. https://www.sanofi.com/en/media-room/press-releas
es/2023/2023-06-13-12-00-00-2687072

5. https://emerj.com/ai-sector-overviews/artificial-intelligence-at-pfizer/

6. https://www.fiercepharma.com/marketing/astrazeneca-enlists-artificial-intelligence-for-
sales-rep-coaching-boost-effectiveness

7. https://www.veeva.com/resources/veeva-unveils-vault-crm-next-generation-of-crm-for-
life-sciences/

8. https://www.strategyand.pwc.com/uk/en/insights/genai.html

9. https://doi.org/10.1111/jems.12576

10. https://www.strategyand.pwc.com/de/de/presse/2024/generative-ki-kann-bip-heben.html

11. https://www.pwc.com/gx/en/issues/transformation/insights/transforming-precision-
health.html#data-fuels-precision-health-opportunities

12. https://www.whoop.com/de/en/thelocker/introducing-whoop-coach-powered-by-openai/

13. https://pubmed.ncbi.nlm.nih.gov/25626223/

14. https://doi.org/10.1161/STROKEAHA.123.043004; https://doi.org/10.1371/journal.

pone.0279088; https://claim.charite.de/en/projekte/previous_projects/prediction2020/

15. https://www.pwc.de/de/pressemitteilungen/2023/startschuss-fuer-ki-pilotprojekt-zur-
frueherkennung-von-herzinfarkten-bei-frauen.html

16. https://pubmed.ncbi.nlm.nih.gov/36156661/

17. https://www.umb.edu/news/2020/hey-google-alexa-am-i-at-risk-for-alzheimers/

18. https://www.optima-oncology.eu/

19. https://www.strategyand.pwc.com/de/en/industries/pharma-life-science/daas.html

16 Strategy& | Re-inventing Pharma with Artificial Intelligence

20. https://dualitytech.com/

21. https://www.statice.ai/industries/healthcare

22. https://www.pharmaceutical-technology.com/dashboards/patents/patent-activity-
artificialintelligence-pharmaceutical-industry/?cf-view; https://www.globaldata.com/
marketplace/dataset/globaldata-patents/

23. https://www.strategyand.pwc.com/de/en/industries/pharma-life-science/a-practical-
experience-based-guide.html

Strategy& | Re-inventing Pharma with Artificial Intelligence 17

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