Healthcare could be the next big AI winner: Becci McKinley-Rowe
XLV•Healthcare companies may benefit from AI through lower drug-development costs and faster timelines, with development currently taking around 10 years and $2 billion per medicine. BlackRock data shows $25 billion has flowed into healthcare exchange-traded products since outflows ended in August 2025.
1. AI and drug development
Healthcare may be positioned to benefit from AI adoption because of its large stores of proprietary data, the potential to reduce research and development costs, and the value of faster drug development. BlackRock’s analysis of more than a thousand public company earnings reports found a greater percentage of companies across every US market sector are reporting tangible financial gains from AI, though only 30% of technology companies said AI had boosted their bottom line.
2. Potential cost savings
Around 90% of drugs in development are never approved. Developing a new medicine currently takes about 10 years and $2 billion, and AI could shorten timelines across research, clinical testing and documentation. Companies are already using AI models to design molecules, analyze genomic and clinical data, identify drug targets and simulate trial outcomes.
3. Flows and performance
Healthcare exchange-traded products saw more than $17 billion in outflows from January 2023 through August 2025, followed by $25 billion in investment since then, BlackRock data shows. The article says healthcare stocks have typically outperformed on days when AI-related stocks underperformed since ChatGPT launched in 2022. It also notes a 122% gap between the top- and bottom-performing stocks in the Russell 3000 Healthcare Index from 2005 to 2025, compared with 67% for the broader Russell 3000.
