Anyone planning to readjust their investment portfolio for 2018 with some online stock trading in the weeks ahead will be interested to take note of a recent interview with Austrian tech guru Hermann Hauser. Hauser, founder of FTSE 100 chip giant ARM, believes the big pharma companies are sleepwalking into their own ‘Kodak moment’ and that advances in AI technology are set to disrupt healthcare in a way that spells trouble for drugs makers. In an interview with The Times he details how he believes a passive approach to the potential of AI technology in prevention could see a significant shift away from drug use.
Wearable tech and apps such as watches and wristbands tracking things like heart rate, blood pressure and diet will, Hauser believes, start to provide us with constant real-time health check-ups. He also believes we may soon all be wearing implants that record data on all of our vital functions. This will keep us, on average, healthier for longer and lead to less drugs being required for ‘after the fact’ treatment. And Hauser predicts the apathy pharma companies are demonstrating could severely impact their future profitability as they risk being overtaken by more tech-focused and savvy start-ups.
On the future impact of AI in healthcare Hauser states: “they know this is coming, but their heart isn’t in it.” Hauser is now a Cambridge-based Angel investor and runs Amadeus Capital Partners, a venture capital company with a particular interest in health and medi-tech. One of Amadeus’ most successful early stage investments to data was in Solexa, a British gene-sequencing company. In 2006 it was sold for $600 to £24 billion US biotech company Illumina. Hauser regrets Solexa wasn’t able to remain an independent UK company and criticises the attitude to risk he sees as prevalent among British investors, biotech and pharma companies.
“The serious problem is still the London market and the lack of willingness to back slightly risky ideas, like Solexa,”
Brexit is another threat to UK pharma companies if a deal on mutual recognition of drugs cannot be reached with the EU. And reverting to World Trade Organisation rules would cost them £86 million in just the first year after Brexit minus free trade agreements being thrashed out.
While any major drop in drug revenues resulting from AI-powered prevention would not be expected by the end of this year, those investing online in ISAs and SIPPs may want to keep an eye on any pharma-industry allocations to portfolios. Sticky Brexit negotiations could hit share prices sooner rather than later and longer term companies ignoring the industry developments Hauser highlights could suffer more permanent damage.