Global AI in Healthcare Market - Focused Insight 2024-2029

AI IN HEALTHCARE MARKET SIZE, GROWTH INSIGHTS

The global AI in healthcare market was estimated at USD 14.33 billion in 2023 and is projected to reach USD 153.61 billion by 2029, exhibiting a CAGR of 48.50% throughout the forecast period. The primary drivers of market growth include the lack of healthcare professionals, the introduction of AI technology, the rapid rise of AI applications in medical imaging, and the growing integration of automation and robotics within the healthcare sector. Additionally, the increasing number of AI startups in healthcare, the shift towards customized treatment options, and the rising necessity for digital transformation in healthcare are boosting demand for AI solutions in the industry.

MARKET DEFINITION

AI in healthcare encompasses a wide range of applications involving machine learning algorithms and various cognitive technologies, including deep learning (DL) and natural language processing (NLP), aimed at enhancing patient diagnosis, treatment outcomes, and overall experience. Over recent years, AI has become an integral part of healthcare, demonstrating significant advancements. It is transforming methods for diagnosing, treating, and monitoring patients, as well as facilitating drug discovery and the development of advanced medical devices. Recently, AI has dramatically changed the healthcare landscape, gaining considerable attention.

MARKET TRENDS & DRIVERS

Emergence of New AI Startups for Healthcare

The application of AI in healthcare is a rising trend that has resulted in an influx of new startups in the global market. The growth of these startups is introducing innovations, tools, and technologies that are transforming the healthcare industry. Each year, numerous new AI startups focused on healthcare solutions are established. The ability of these startups to provide remote patient care has become a significant factor in regions with limited medical resources. This decade is expected to witness an increase in AI healthcare startups. In the previous decade, between 12 to 15 startups were established every year, while this figure has surged to over 70 to 110 new AI healthcare startups globally. Hence, the growing number of new startups is anticipated to create valuable market growth possibilities. There has been a substantial rise in healthcare investment funding over the last 10 to 13 years, with more than $20 billion contributed in 2021 alone. This has drawn many startup companies to create new AI healthcare platforms. According to the AI Index Report 2023 from Stanford University, healthcare received the largest amount of investment among AI sectors in 2022, totaling $6.1 billion globally. In 2019, investment in healthcare AI startups was $4 billion, with over 350 transactions. This notable surge in investment for AI healthcare startups suggests that the number of new startups will keep increasing. Furthermore, the ongoing trend of digitalization, government backing, and advancements in the healthcare sector are presenting significant opportunities for AI healthcare startups, which are projected to yield considerable market growth potential. Most of these new startups originate from the US, Israel, India, and Europe.

Paucity of Healthcare Workers & AI Emergence

The global healthcare sector is currently experiencing a significant shortage of healthcare professionals. This issue has been worsened by the COVID-19 pandemic. Healthcare facilities are confronted with two primary challenges: a decreasing workforce and an increasing patient population. According to the World Health Organization, there will be a deficit of over 10 million healthcare workers by 2030. Additionally, the retirement of the aging healthcare workforce, escalating demand for professionals and specialists, emergencies, and various related challenges have created a substantial need for improvements in healthcare infrastructure to alleviate the burden. Research indicates that by 2024, approximately 48% of healthcare systems will incorporate AI solutions to address workforce issues, as reported by TechTarget & Health IT blogs in 2023. The introduction of AI in healthcare environments is providing innovative methods to monitor workforce shortages while improving processes and efficiencies, managing backlogs, automating repetitive tasks, and accommodating unpredictable capacity needs. The growing adoption of AI in healthcare can potentially reduce costs by $200 billion to $300 billion. Furthermore, it can enhance report analysis procedures by around 150 times compared to traditional approaches. These elements are driving the increasing demand for AI in healthcare. About 55% of healthcare workers report feeling a significant workload pressure. Among these, nurses face the highest burden at 56%, closely followed by clinical staff at 55%. As a result, these healthcare professionals suggest that utilizing AI in healthcare services could decrease their burnout by 70% to 90%. In addition, AI aids in diminishing administrative workloads, automating documentation, improving diagnostic accuracy, enhancing decision-making support, and bolstering preventive care for patients. This suggests that AI is emerging as a valuable tool and is predicted to experience considerable growth within the healthcare sector.

GLOBAL AI IN HEALTHCARE MARKET INSIGHTS

• Insight By Component: The global AI in healthcare market is divided into two types: software & services and hardware. The software & services category represents the largest portion of the market. The ongoing advancements in AI are driving a substantial demand for sophisticated software tools and services. AI-driven healthcare software is rapidly revolutionizing the medical field, providing clinical practitioners and pharmaceutical firms with new, state-of-the-art tools to enhance patient care, diagnosis, treatment, and drug discovery. Utilizing machine learning and data analytics, AI healthcare software analyzes patient information, forecasts clinical outcomes, and aids in delivering more tailored treatment plans that alleviate the strain on hospitals. Additionally, software contributes to minimizing medical and dosage errors, boosting operational efficiency, and potentially saving millions of lives each day. Numerous companies supply high-quality software and services that encompass various aspects of healthcare management, demonstrating time and cost savings while enhancing the balance of human involvement.
• Insight By Application: The global AI in healthcare market is classified by applications, including hospital workflow management, patient management, medical imaging & diagnosis, and drug discovery & precision medicine. The hospital workflow management segment is experiencing notable growth, exhibiting the highest CAGR during the projection period. AI is addressing the challenges posed by traditional healthcare data management approaches. There has been a dramatic rise in patient data stored in electronic health records (EHRs), which is prone to issues such as incompleteness, inconsistency, redundancy, and noise. Furthermore, online data generation nearly doubles every five years worldwide, overwhelming manual processing capabilities and increasing the demand for AI in managing hospital workflows. A key trend in AI hospital workflow management involves predictive analytics, which enhances decision-making. This factor is significantly transforming the landscape, enabling the prediction of patient conditions and the assessment of patient needs through sophisticated algorithms.
• Insight By Technology: The machine learning technology segment commands the largest global AI in healthcare market share by technology type. Machine learning (ML), a branch of AI, allows software applications to make more precise predictions. Machine learning algorithms utilize historical data as their input to forecast new results. This technology can provide insights into customer behavior patterns and expedite business processes related to new product development, forming the foundation for many leading companies today. Investing in AI and machine learning offers numerous advantages for the healthcare sector. By employing AI-driven machine learning, many daily tasks can be automated, thereby reducing the burden on healthcare workers. Nowadays, data analysis is recognized as the key driver of healthcare practices and biopharmaceutical companies, and machine learning facilitates this analysis. With vast amounts of data generated daily within healthcare sectors, effectively storing, processing, and analyzing this information has become a significant challenge. AI machine learning algorithms efficiently handle large datasets, helping to mitigate the burden on the healthcare industry and lowering the considerable costs associated with these processes. A range of hospitals, biopharma companies, clinical studies, and research organizations are utilizing machine learning applications.
• Insight By End-User : The pharmaceutical and biotech sectors, along with medical device companies, are projected to experience the most significant growth during the forecast period. AI can be utilized in nearly every area of the pharmaceuticals and biotech industry to enhance data processing capabilities. Embracing this technology is likely to uncover the vast potential within the health sector, particularly in research and development, thereby facilitating growth in this segment. AI has the potential to enhance production processes that are already in place. It positively influences quality control, shortens drug design timelines, enables predictive maintenance, lessens waste, and affects various other aspects. Recently, AI has considerably propelled the biotech field, enabling firms to accelerate drug discovery while making it more economical. The COVID-19 pandemic has spurred the adoption of AI as a crucial tool for identifying diagnoses, treatments, and vaccines more accurately and swiftly. Since the pandemic, there have been numerous advancements in drug discovery attributed to AI within biopharma companies, allowing for rapid and effective results.

GEOGRAPHICAL ANALYSIS

North America holds the largest share of the market and is the quickest growing region in the global AI healthcare sector. The U.S. leads this regional market due to its advanced healthcare infrastructure, digital transformation, and widespread adoption of IoT in healthcare facilities, increased demand for telemedicine and telehealth, and extensive acceptance of technologies for health management. More than 35% of healthcare professionals in North America anticipate AI's role in healthcare services. In the U.S., over 38% of healthcare professionals and patients believe that incorporating AI in medicine and health could yield improved patient care outcomes. The transition from hospital-based care to home care delivery is driving the uptake of telehealth/telemedicine services, increasing the rate of AI integration. Most healthcare professionals express positive sentiments toward AI usage. After the COVID-19 pandemic, the employment of AI by healthcare professionals has surged significantly.

VENDOR LANDSCAPE

The global AI in healthcare market includes unique data on 40 vendors. The market is highly diverse and fragmented. While leading corporations dominate the landscape, there are substantial opportunities for new entrants. Despite the presence of major players, numerous startups and smaller companies are emerging with innovative AI health solutions. Key players such as Google Health, Amazon Web Services, Microsoft Corporation, Medtronic, NVIDIA Corporation, Siemens Healthineers, Intel Corporation, Merative, and Augmedix represent a significant share in the global AI healthcare market. These companies are actively developing and investing in AI-driven health tools and are anticipated to maintain their market dominance through ongoing engagement.

RECENT VENDOR ACTIVITIES IN THE GLOBAL AI IN HEALTHCARE MARKET

• In 2024, Google Cloud unveiled a generative AI tool named Vertex AI, enabling clinicians to search through patient notes, clinical data, and scanned documents. In addition, in 2023, Google introduced MedLM, a generative AI healthcare model featuring two tools derived from the language model Med-PaLM 2.
• In 2024, NVIDIA Healthcare introduced new generative AI microservices tailored for chemistry, biology, imaging, and healthcare information within every NVIDIA DGX Cloud.