Morgan Stanley sizes Alzheimer's drug market at $70 billion, favors AI suppliers

Morgan Stanley identified investment opportunities in Alzheimer's drugs, in-vivo gene editing and artificial intelligence in research by analysts Sean Laaman and Maxwell Skor. The research coincided with the bank's annual Global Healthcare Conference in New York. Morgan Stanley sized the Alzheimer's drug market at $70 billion, covering therapies that slow cognitive decline and treatments for symptoms including psychosis and agitation. The bank said delaying nursing home entry by 12 to 18 months could deliver value to US healthcare worth multiples of a drug's list price. Morgan Stanley said diagnostics, care delivery, retirement and insurance firms could benefit or need to adapt. Early gene-editing therapies involved removing cells, editing them in a laboratory and returning them to the body. In-vivo therapies instead edit DNA inside the body, potentially reaching organs that are difficult to remove, including the brain, heart, eyes and liver. Morgan Stanley forecast a $10 billion in-vivo gene-editing market by 2035 for near-term indications, compared with a $6 billion consensus estimate. Data expected over the next 18 months could shape how investors value in-vivo gene-editing platforms. The analysts estimated that AI could shorten drug-discovery timelines from about 4.5 years to 1.5 years. The analysts estimated that AI could lower research and development costs by 25% to 60%. However, there is little proof that AI increases the likelihood of a drug reaching patients. Morgan Stanley therefore prefers companies supplying AI data, tools and computing power over drug developers. Those suppliers already generate revenue from AI adoption and depend less on individual clinical outcomes. The bank is selectively monitoring AI-focused biotechnology companies for significant clinical results and is skeptical of productivity gains at large drugmakers. Clinical data can still move biotechnology shares sharply, as Moderna's August rally after a late-stage cancer vaccine result showed. Morgan Stanley strategist Mike Wilson warned in mid-September of a correction within 30 days if an oil-price spike drains liquidity. The research suggests that investment exposure farther from drug development is more immediately actionable, while the greatest potential upside depends on clinical data.