Is it possible that your friend is abusing drugs? That can mimic (or even bring on) psychosis.

If he does have schizophrenia (or any other mental illness), the sooner he is treated, the better the outcome. It is ideal to start treatment (medication, psychotherapy, or both) *before* he has a psychotic break. Try to get him to go to treatment. If he won't talk to someone, maybe talk to his family about it.

I know it is really difficult to know what to do or how, especially since he's an adult and is allowed to make his own decisions regarding treatment (unless he becomes a danger to himself or others, which is a high standard). He may not even recognize that anything is wrong.

If you can even get him to go to the doctor for his sleep problem, that would be a step in the right direction. Tell his family about it and maybe they can write a letter to the doctor beforehand, so he knows what to look for and ask about.

Good luck. I hope your friend gets the help he needs. Just know that there are treatments out there. He is lucky to have a friend who cares.