Artificial intelligence is cutting healthcare costs and accelerating drug research while leaving demand untouched. The market has overlooked these gains, creating pricing anomalies that offer clear entry points for investors.
Healthcare generates more data than any other sector, and AI's core strength lies in sorting, analysing and drawing patterns from that information. AI tools can interpret CT scans in milliseconds and comb through drug-trial data in minutes rather than months. They also analyse hundreds of historical studies to identify new treatments. AI for Healthcare training covers these exact use cases, helping professionals understand the technology driving the investment thesis.
Demand for healthcare will not shrink as technology improves. Humans do not stop falling ill, and AI may expand demand by enabling treatments for previously incurable diseases and extending lifespans. Yet the market's focus on the largest AI companies has left healthcare-related plays underappreciated.
Cost savings and margin recovery
According to broker Panmure Liberum, the global healthcare sector trades roughly in line with its long-term valuation history. Adjusted for normalised profit margins, however, it sits at levels not seen since 2009-2012. Margins have fallen from 10% to 6-7% over the past five years as costs rose, a trend that AI should help reverse.
The broader healthcare sector trades at a 50% discount to the MSCI All Countries World Index on a normalised earnings basis. The pharmaceutical sub-sector paints a different picture: it appears cheap on a simple price-to-earnings multiple but looks expensive once margins are adjusted back to their historical 14% level, well below the current 18%.
Still, both sub-sectors deserve a premium. Over ten years, the MSCI ACWI Healthcare index posted 7.6% annual revenue growth and 5.9% earnings growth, while pharmaceuticals delivered 5.9% and 7.1% respectively. The broader ACWI managed just 2.5% revenue growth and 4.5% earnings growth.
Investment trusts for the AI-driven shift
Worldwide Healthcare Trust (LSE: WWH), managed by OrbiMed with over $20 billion in healthcare assets, has been hurt by its overweight exposure to China and biotech in recent years. But 2025 brought a rebound: the trust outperformed its peer group by seven percentage points. Since 2010, it has beaten the MSCI World Health Care index by 2.3% per year. The shares stand at a 7% discount to net asset value (NAV).
Polar Capital Global Healthcare (LSE: PCGH) leans toward the undervalued healthcare sector rather than biotech. Four years ago it traded at a 12% discount; now it sits at a premium and has been issuing new shares. Over five years, it beat its benchmark by 39.2%. After a restructuring last year, it added gearing of £40 million, equivalent to 9.7% of NAV, to capitalise on low valuations.
On the more speculative side, RTW Biotech Opportunities (LSE: RTW), Biotech Growth Trust (LSE: BIOG), and International Biotechnology (LSE: IBT) all trade at near double-digit discounts. Their biotech focus demands greater caution.
BioPharma Credit (LSE: BPCR), run by Pharmakon, offers a different model. It makes loans secured against companies' drugs and products. Since 2009, only one loan has failed to perform as expected. The trust trades at a 5% discount to NAV and yields 10.9%.
Why this matters for finance professionals
The healthcare sector's combination of AI-driven cost cuts and depressed valuations creates a rare margin-of-safety opportunity. For investors who can look past the market's narrow AI obsession, listed trusts provide direct exposure to the theme with diverse risk profiles. Finance professionals who build expertise in sector-specific AI applications - whether in healthcare or through broader AI for Finance training - will be better equipped to assess these opportunities as they evolve.
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