IBM is shuttering its Watson AI tool for drug discovery

• This is an excerpt from a story delivered exclusively to Business Insider Intelligence Digital Health Briefing subscribers.
• To receive the full story plus other insights each morning, click here.

In the most recent blow to its health unit, IBM Watson is cutting off sales of its artificial intelligence (AI) drug discovery tool after reporting lagging sales, per Becker's Hospital Review.

For context, the drug discovery program was introduced in 2014 to help pharmaceutical companies develop drugs. While IBM will still support current pharma clients using the software, Watson will no longer market the product and is instead doubling down on clinical development tools.

Here's what it means: This is just the latest setback for IBM's health play.

• Watson's struggled to prove its efficacy to health systems.Watson came under fire for producing erroneous treatment recommendations for hypothetical cancer patients during an internal testing phase in July 2018, according to internal documents cited by STAT. Watson also struggled to retain major hospital clients in 2018, citing softening demand, according toStat.
• And Watson's undergone a leadership shakeup in the last year. The head of IBM Watson stepped down in October 2018 following tepid earnings and growing skepticism around Watson's viability as a clinically useful platform. This followed a slew of layoffs that affected the health unit in June 2018.

The bigger picture: Watson's move to concentrate AI efforts on clinical development could help it regain some much-needed steam in healthcare.

• IBM could fill a massive market need to streamline the clinical trial process. Clinical development is a major pain point in the drug supply chain: Developing a new oncology drug, for example, runsdrug developers somewhere between $650 million to more than $2 billion over an average of seven years, in part due to difficulties recruiting patients for clinical trials. If IBM hones its AI tools to better identify patients who are a good match for clinical trials, it could generate a ton of revenue from healthcare.
• And IBM still has a vast network of healthcare customers it can use to bolster sales. IBM's existing ties to pharma giants Pfizer and Novartis, for example, could help Watson drive sales to a revamped clinical development product. IBM's already had some success marketing its clinical development tools: It teamed upwith New York- and Connecticut-based health system Health Quest to leverage Watson's AI tools to boost participation in clinical trials in March 2019, for example.

Interested in getting the full story? Here are two ways to get access:

1. Sign up for the Digital Health Briefing to get it delivered to your inbox 6x a week. >> Get Started

2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Digital Health Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now