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Health Innovation Strategy develops an AI investment tool.

Jack Torrance , Investment specialist, Health Innovation Strategy
The team is training an algorithm to help it identify healthcare companies capable of revolutionising patient care and delivering outsized returns.

A convergence of technologies has led to an explosion of new companies operating in both the public and private markets. Within them, scientists and entrepreneurs are commercialising cutting-edge discoveries to advance a healthcare revolution. Baillie Gifford’s Health Innovation Strategy is fascinated by, and invested in, several firms using artificial intelligence to reveal biology’s secrets as well as to make hospitals and clinics more efficient, among other uses.

This interest is driven in part by our relationship with a group of experts. They include Dr Iya Khalil, Global Head of the AI Innovation Centre at Novartis. She uses artificial intelligence techniques to aid the Swiss company’s work on drug discovery. And her efforts have prompted us to consider how we could use AI to become better investors.

One of the big breakthroughs of modern times has been the use of state-of-the-art pattern recognition techniques to determine the folded structures of proteins. The methods involved share common features with an experiment we’ve begun to try to predict what successful healthcare companies should look like.

The initiative will draw on vast lakes of data beyond traditionally measured financial metrics and broker research. It’s a complex task. But we’ll be bolstered by a new Research Engine team, headed by Baillie Gifford’s Informations System Team Leader Anurag Angurwal, and made up of four further data scientists dedicated to the task.

The aim is to create a tool to help us spot trends more quickly than the rest of the market. And this would support, rather than replace, the bottom-up research we already carry out into companies. The algorithm involved will aggregate healthcare information from the worlds of business, academia and other research. Its training data will include the Health Innovation Strategy’s past successful ‘behaviours’ as well as those from Baillie Gifford’s wider history. It’s worth repeating that this is only an experiment at this stage. But if successful, it should steer us towards opportunities that our own biases might have caused us to miss.

Risk factors

The views expressed in this article are those of Jack Torrance and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect personal opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.

This communication was produced and approved in September 2021 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

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Author

Jack Torrance

Investment specialist, Health Innovation Strategy

Jack is the investment specialist for the Health Innovation Strategy, having joined Baillie Gifford in 2019 in the Clients Department. Prior to joining Baillie Gifford, he was an Infantry Officer in the British Army for 8 years completing two combat tours in Afghanistan and Iraq. Jack graduated BA in Middle Eastern Studies from the University of Exeter in 2011 and speaks fluent Arabic.

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