As 2018 gets underway, we were excited to kick off our year at the JP Morgan Conference, an invitation-only symposium that brings top-tier pharma, biotech, payer, provider and finance leaders together with innovation and technology executives of consequence in San Francisco for four days of chaos. This year, 400 companies presented themselves to 8,000 event attendees, and many thousands more were networking “outside the bubble” at satellite events, both formal and informal. The combination of official and unofficial events lead to informative panels, thought-provoking keynote speakers and plenty of socializing. In fact, we thought offsite events were just as exciting and significant to the thought leadership as the official conference.
Each year, we come back home and reflect on some of the more interesting and profound takeaways from the conference. Here’s what’s got us thinking about for 2018:
1. Blockchain is all the rage.
Of course, blockchain technology has been a hot-button topic for some time now, but it will bubble to the top this year. It has the potential to transform healthcare through the elimination of waste and the establishment of secure infrastructure. The excitement regarding blockchain stems from the transformative potential that it retains as an infrastructure, similar to the establishment of the transmission control protocol and internet protocol, which laid the groundwork for the internet today. Applications we heard discussed include healthcare data infrastructure, secure EHRs, healthcare analytics, medtech, Internet-of-Things (IOT) security, identity confirmation, supply chain, smart contracts and of course, digital medicine. Although healthcare has lagged behind other industries in the adoption of blockchain technology, 2018 is the year more we expect both early stage and corporate investors will inject substantial liquidity. There was even some talk that startups focusing on blockchain on commanding a premium valuation simply because of their association with the technology. By continuing to bolster our own expertise with the technology, we expect our clients to increasingly request diligence and analysis of potential applications.
2. Patient experience is guiding digital health.
While digital health is always a hot topic at the conference, the focus on the patient experience has intensified. We even heard from early stage biotech firms that investors are asking to consider patient experience and engagement in all projects. The future of healthcare will be personalized and biopharmaceuticals along with medical technology will follow this trend. By leveraging increasing amounts of genetic, prescriptive, clinical and behavioral data, therapies will increasingly focus on specific indications and populations in order to both “secure” market share against competitive products and differentiate via the value-added services targeting the patient experience. We expect to see biotech leaders seek, procure and use behavioral data to measure and optimize engagement with patient support programs and invest in improved patient-centered support platforms and vendors to associate with their therapies. As such, we expect behavioral health and patient experience will remain a significant consideration and opportunity for differentiation for all biotechnology firms in 2018.
3. Gender equality in biotech matters, too.
While we observed last year that the JP Morgan conferences skewed heavily male last year, it seems that we may still have a ways to go in reaching better parity, as noted by one of the hotter trending tweets during this year’s conference. There is a clear gender gap in many of the biosciences, but it is biopharma that has women most underrepresented in leadership. The number of women seeking PhDs and post-doctoral education is on the rise, so our industry should make good on their promise from 2017 to balance out this inequality and to rebalance leadership in STEM fields. Here at Medullan, we are intentional about investing in diversity to improve our perspectives and our work. We’ve seen the payoffs in creativity, strategy and efficacy and we will do our best to continue to promote that type of diversity to our clients, partners and the industry at large.
4. Investment continues to heat up
As an investment class, the biotech sector has seen consistently increasing levels of early and late stage capital investment over the past two years. With increasingly aggressive and improved rates of efficacy coupled with rapidly rising prices, we expect 2018 to continue this trend. We further expect for this to be a big year in oncology. With the late news last year of innovative CAR-T and immuno-oncology achieving aggressive Progression Free Survival rates, there are no signs that this oncology bubble is popping soon. Even more pronounced has been recent levels of investment in diagnostic and remote monitoring technologies. Investors appear to be looking towards clinically differentiated solutions as the solution to significant levels of saturation in the market, fragmented data and limited efficacies. Based on this trend, we view 2018 as an opportune year for bio pharmaceuticals executives to leverage well-developed digital health technology to sustain and diversify revenue. We see a great opportunity to deploy digital health remote monitoring in oncology, which should allow corporations to capitalize on both of these trends.
5. There is much opportunity in pursuing the basics
The waste and inefficiency found in the US healthcare system make up nearly a third of our medical costs. Yet, even in 2017, much of the emerging technology out there has failed to reign in the excess waste and the existing inefficiencies. Investors are getting smart to this and even though there is a significant level of investment pouring into digital health solutions, both investors and corporations are also starting to incorporate efficiency and cost reduction into their benchmarks for digital health investment. There is an emerging class of infrastructure-related digital health startups that are seizing this opportunity. Progress will be incremental but we should start to put in the tools that will help to chip away at this large amount of unnecessary spend.
6. China's role in U.S. and global healthcare markets is growing.
China’s healthcare sector is growing at an astounding rate, making it one of the world’s most impressive and fastest evolving markets. It is estimated to grow to around 1 trillion dollars by the year 2020. Since 2009, China has been pursuing healthcare reform to establish a basic, universal health system to provide safe, effective and low-cost care to its citizens. In parallel to this, a significant portion of the $125B committed to health reforms looks to be deployed to health IT infrastructure, which creates an opportunity for private health IT vendors to find significant footing in a nascent market.
Throughout the conference, it was clear to me that China can function as both a source of capital and innovation in biotech and digital health industries. We saw many instances of technology and thought leadership coming from Chinese-led corporations. While we believe that a good amount of China’s investment capital for digital health is likely to be directed inward targeting domestic initiatives, more traditional targets of capital such as biotech and pharma will likely be directed to activity in U.S. and Europe. It’s exciting that healthcare innovation and technology is increasingly taking global form and see potential synergy is discovering and deploying best practices from both markets.
7. New U.S. tax legislation will fuel M&A
There was quite a bit of buzz around the conference regarding the recently signed U.S. tax legislation. In 2018, multinational companies and investment firms will have more money to spend as the legislation makes it easier to repatriate foreign funds. We believe this additional liquidity should fuel investment activity in life sciences large scale M&A as well as exploratory corporate investments into digital health and early stage technology.
8. We’re still in the early stages of digital health transformation
Conference goers seemed to agree that 2018 will not be a transformative year for healthcare in U.S., but rather one in which we’ll continue to see emerging innovations and incremental transformation. Both corporate and entrepreneurial business leaders will continue to invest in promising early-stage technologies and treatments, but know they will be settling in for the longer haul atypical of VC investment.
As always, this year’s conference kept us busy and we were energized by our conversations with a variety of innovators, investors and healthcare leaders. It was clear that investors came to get deals done. Like last year, it was a networking bonanza with plenty of introductions and our heads are still spinning from all of the excitement and passion we saw. It will be an exciting year ahead, we’ll check back in at the end of the year to see how our observations panned out!
If you were at the conference, what excited you most? Drop us a line, would love to hear your thoughts!
Ben Dean is a Manager of Strategic Partnerships at Medullan. Ben recently published an E-Book on digital health commercialization strategies in Pharma ,Getting Beyond Beyond the Pill. You can download it for free using this link.