Sanofi is leaning on Google's AI and cloud-computing tools for drug advances (GOOGL)

Pharmagiants are rushing to get a hold of AI.Eli Lilly struck a $560 million deal with San Francisco-based AI developer Atomwise which also holds partnerships with Merck and AbbVie to accelerate drug discovery earlier this month, and AstraZeneca tied up with UK-based BenevolentAI in May. It makes sense for pharma companies to lean on tech that makes drug development more efficient: Drug makers shell out $2.6 billion to develop a new prescription medication and bring it to market, up from the$1 billionit cost inthe early 2000s.
And pharma'sdemand forAIhas created a doorway fortechplayers to slide into the health space.Big names in innovation have forged deals with pharma companies:Verily linked up withNovartis, Sanofi, Otsuka, and Pfizer last month to streamline clinical trials. AndIBM Watson boasts partnerships with Sanofi, Johnson & Johnson, and Pfizer for its drug discovery program, but halted the program's advancement in April.

We'll likely see more pharma companies tap digital health tech to ease the strain on revenue stemming from government scrutiny.Pharma companies might feel more pressure than ever to invest in tech that provides a financial cushion since the government is kicking efforts to up transparency and slim drug price tags into high gear.

For example, the HHS unleashed a rule last month that will force pharma companies to list drug prices on TV ads come July. And it's clear these companies are feeling the heat:In response,Eli Lilly, Amgen, and Merck slammed theCenters for Medicare and Medicaid Serviceswith a lawsuit last week, per The Wall Street Journal.

Andthey'repouringmore cash into lobbyingefforts, which is a trend we expect to continue:Drugmakers spent $70 million on lobbying efforts in 2018, marking the second highest spending year on record after 2009 when theydoled out$87million in the wake of the Affordable Care Act, per Market Watch.

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Sanofi is leaning on Google's AI and cloud-computing tools for drug advances (GOOGL)

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