Mind Meets Machine in Brain-Computer Interfaces

Thoughts on the Market

Our Medical Technology expert analyzes the medical potential and market opportunity in technology that allows direct communication between the human brain and an external device.

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Welcome to Thoughts on the Market. I’m Kallum Titchmarsh, from Morgan Stanley’s U.S. Medical Technology Team. On today’s episode – a dive into a topic that sounds like it’s straight out of science fiction. Brain Computer Interfaces, or BCIs.

It’s Tuesday, October 22, at 10 AM in New York.

The latest version of Tony Stark – better known as his alter ego Iron Man – is a good example of a brain computer interface. When the billionaire businessman-inventor is critically wounded, he builds an armor suit that gives him superhuman abilities. Flying through air. Clearing out obstacles with repulsor blasts. Shooting enemies with guided missiles. All controlled by his brain.

This, of course, is the stuff of science fiction. Real world examples of brain computer interfaces – or BCIs – aren’t fantastical. But they are fascinating. Translating thoughts into actions like generating text on a screen or moving a robotic limb.

BCIs have been in development for more than a century, but recent advances have brought them much closer to becoming a reality. We expect to see BCIs in commercial medical use in about five years, at which point they can help treat a wide range of health disorders, from motor neuron disease – such as ALS – to depression.

The market opportunity for BCIs looks enormous – $400 billion of total addressable market – or TAM – in the US alone. This figure includes two types of BCIs: enabling BCIs, which facilitate behaviors like moving a cursor on a screen, and preventive BCIs, which can prevent adverse events like depressive states or epileptic seizures.

We divide the BCI healthcare opportunity into two segments: early TAM and intermediate TAM. The early TAM includes individuals with critical upper limb impairment and select variants of neurological conditions like epilepsy and depression. These patients will likely be the first to receive a BCI. The intermediate TAM includes patients with moderate upper limb impairment and severe lower limb impairment. As BCI technology develops, these patients will eventually become eligible for treatment.

There are at least 2.8 million patients in the US forming the early TAM and an additional 6.8 million within the intermediate TAM. Together, these groups represent the $400 billion of potential revenue I already mentioned based on a single implant procedure.

The opportunity may be significantly larger when factoring for potential replacement cycles and recurring revenues from software upgrades. But while the estimated TAM is indeed vast, we think penetration will remain limited through the first 20 years of launch. By 2035, we expect just under $1.5 billion of revenue to be generated from BCI implant procedures, hitting north of a $500 million annual run rate in 2036, and reaching the $1 billion annual run rate by 2041.

It’s exciting to think BCIs will begin their healthcare application in the coming years, but we anticipate a number of regulatory hurdles on the way to widespread adoption in healthcare and beyond. Will BCIs push into fields like neurogaming, warfare, and even biological optimization of humans?

The potential is certainly there, and with it the burden of the safe and responsible use of this cutting-edge technology.

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