Novo Nordisk is deepening its push into artificial intelligence, teaming up with Anthropic to deploy the start-up's models in its hunt for next-generation medicines.

The Danish drugmaker said Wednesday that it would partner with Anthropic to use AI in drug discovery and development. As part of the partnership, Novo will test models like Claude Science in a research setting and leverage them to build out AI-driven software.

Novo formed a similar pact with OpenAI in April to leverage AI models for data analysis and expedite the identification of potential drug candidates. More recently, Novo named Amazon Web Services as its strategic partner to build an AI "co-innovation hub" in London.

For investors, the AI debate is a delicate balancing act between hope and hype. Major Wall Street estimates are compelling: Goldman Sachs projects AI could save the industry up to $400 billion over the next decade by cutting costs, accelerating development, and boosting the odds of success for experimental drugs.

The optimism has been building for months. In a lengthy report last year, Jefferies analysts said generative AI held "significant long-term promise to transform drug discovery," a process they described as "lengthy, costly, and risky."

Novo isn't alone in its push: Sector heavyweights including major rival Eli Lilly have scaled up their AI efforts in recent years. In March, Lilly struck a $2.75 billion deal with Hong Kong's Insilico Medicine-a so-called AI drug developer-to fast-track candidates across oncology, immunology, and metabolic disease.

Still, investors will have to wait years for tangible proof that AI can deliver on its hype. It takes an average of eight to 10 years to bring a single drug from laboratory discovery through clinical trials and finally through regulatory approval. The stakes are high as over 90% of drug candidates fail during development.

Jefferies estimated that capital costs, research, and the expense of failed trials results in an average total investment over $1 billion per successful drug. Consequently, companies have a strong incentive to embrace AI. It isn't just about keeping up with market trends; rather, the technology offers genuine utility in driving down those costs.

Drugmakers of all sizes are rushing to adopt the technology. Schrodinger Inc., a software-focused biotech, uses machine learning and a physics-based approach to accelerate drug development, while Recursion Pharmaceuticals similarly has made AI part of its brand.

Larger players are racing to get in on the action, too. Amgen and Novartis have prominently integrated AI algorithms into their operations, while Novo has moved aggressively to embrace AI this year.

Jefferies anticipates a rapid expansion of AI in biotech over the next five to 10 years, driven by faster, more accurate models and a growing volume of biological training data. While that thesis has yet to play out, Novo is positioning itself to lead the way when it does.

The announcement Wednesday follows Novo Nordisk's recent rebranding, in which it adopted the shorter name "Novo" and unveiled a new logo. Although its legal name remains the same, management stated that the simplified branding should allow for better engagement with stakeholders.