Dive Brief:
- Artificial intelligence will help medical device companies expand their portfolios and revenue streams while gaining efficiencies and curbing costs, Moody's Ratings predicts in a new report.
- The report, which Moody's published Monday, anticipates AI will start to have a positive impact on medical device companies in the next two years. Large companies are best placed to harness AI, the report states, but all companies will need to invest.
- Moody's sees data management and cybersecurity risk as key credit challenges, noting that companies may need to collect and protect large amounts of sensitive data to succeed in AI.
Dive Insight:
Moody's, a provider of credit ratings, research and risk analysis, created the report to help understand how AI may affect the credit quality of companies in the medical device, pharmaceutical and healthcare services industries through 2030. In trying to answer that question, the report provides an overview of the ways AI could affect the medical device industry in the coming years.
The analysts see AI supporting improved product offerings at medical device companies and cites examples of how companies are already using AI. The report lists Smith & Nephew’s AI-based surgical software and Zimmer Biomet’s work on smart knee implants as examples of existing projects. AI submissions to the Food and Drug Administration have surged in recent years.
With Moody’s also expecting AI to improve productivity and efficiency, the analysts see AI having a positive impact on the credit quality of medical device companies in the next two years and continuing to bring benefits from 2026 to 2030.
The benefits may be unevenly distributed. Moody’s sees larger companies as better positioned to use AI because they have more money, personnel and proprietary data. Access to proprietary data could allow companies to customize AI products and services so they sustain a competitive advantage even as the technologies become more widely available and commoditized, the report said.
Companies will face risks as they work to realize the benefits. The large volume of sensitive data used in healthcare AI “brings risks related to data quality and an increased threat of cyberattacks,” the analysts said. Inaccurate or incomplete data can result in flawed AI outputs and decisions, the report states, and the data are valuable to hackers. The analysts see smaller companies as more vulnerable to cyberattacks.
The report also looks at the effect of regulation on AI. Moody’s expects regulation to play “a fundamental role in the ultimate credit impact of AI.” However, the impact is uncertain because rules on AI use are still in their early stages and differ by region.
New legislation could force companies to spend more on compliance. The FDA has plans for the regulation of AI. In the European Union, lawmakers have now agreed on a version of the AI Act that they will put to a vote this year. Moody’s said it believes the law could limit AI's full benefits for credit quality, depending on how it is implemented.
