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SAN FRANCISCO – The healthcare business class returned to its San Francisco sanctuary last week for JPMorgan’s annual healthcare confab at the gilded Westin St. Francis Hotel in Union Square. Two years into the pandemic, there’s been a sense of disconnect among executives, bankers and startup founders — about promotions, work-from-home habits, who’s investing in what. Dressed in their capitalist best – from bright-blue or pastel-purple blazers to puffy-coat chic – they flocked to large parties held in art galleries and restaurants.
But the party was gripped by a new worry: Will the massive spending spree on health care because of COVID-19 continue? Investors demand to see not just good ideas, but results – do you mean profits?
The packed conference had as much talk about profits as patients. Most of the unmasked crowd spoke English, French, Japanese – and of course money.
In addition to corporate and investment types, attendees regularly saw surprising characters – like the famous Dr. Mehmet Oz, fresh off his Senate defeat, holding court in the lobby on January 10th.
If the vibe in the hotel’s crowded halls was upbeat — or at least happy — there was an underlying tinge of anxiety as everyone realized the health care business bonanza was winding down.
The conference began with a sidewalk protest by the pharmaceutical company Gilead Sciences, whose drugs that fight HIV and hepatitis C are highly effective and expensive. During the pandemic, Congress first drafted a plan to negotiate Medicare, the world’s highest drug prices. Gilead is the largest private sponsor of HIV programs in the U.S., company spokeswoman Kathryn Canton said in a statement. ”
‘Tough Year’
Then there’s the economic situation, which is turning ugly. Bloomberg Financial Journalists have identified a lack of exciting deals. Startup executives — who previously had easy access to millions of dollars in investments — seem compelled to show off their results prematurely in bars and coffee shops. Every business executive promises to make a profit now or soon…
“I think it’s going to be a tough year,” Hemant Taneja, CEO of venture capital firm General Catalyst, said on a panel. He pointed out that health tech startups are valued and customers are more interested in knowing that they are providing a valuable service.
The new message to investors was clear. “The idea that you don’t grow up is dead, gone,” Dr. John Cohen, CEO of mental health startup Talkspace, said in an interview.
Some have tried to celebrate both financial and human success. BioNTech founder Ugur Shahin was interrupted by applause. And that was before he mentioned his company’s role in reducing infectious diseases, saving lives and meeting the health needs of tuberculosis and malaria.
The conversation later turned to the cost of his company’s main vaccine — which he joked would set the average government purchase price of $20.69 more than $100. Ryan Richardson, chief strategy officer of BioNTech, argued that “one hundred dollars is a fair price considering the economics of health: the hospitals and the serious consequences are hindered.”
A mind-blowing comment
There was some misunderstanding at the conference. Consider drug giant CVS, which is expanding beyond its retail roots into health insurance and primary care. CVS Health CEO Karen Lynch said the company is looking at all aspects of health as part of its health business. “Health isn’t just about the relationship with the provider. It’s about everything else — including housing and nutrition,” she says. What was often overlooked was when CVS customers entered the store: receiving candy, chips and other processed foods.
For critics, it was a mind-blowing comment. “The last I heard, CVS was a for-profit organization, not a social welfare agency,” said Marion Nestle, a longtime critic of the food industry. “It sells junk food that makes people sick and sells drugs to treat those diseases. What a great business model!”
CVS spokesman Ethan Slavin offered a very different vision, one where CVS is looking to become a premier health and wellness destination. “We are always improving our food and beverage selection to offer healthy and seasonal products.” He added that it is supporting programs to strengthen food supply in underserved areas.
Some techniques have faced new doubts about “artificial intelligence”. Ginkgo Bioworks founder Jason Kelly said during a presentation that attendees at the conference hear so much about artificial intelligence during meetings that they “want to stop hearing it.” (Ginkgo’s AI, used to support pharmaceutical and biotech research, was different from the rest.)
Dr. Rajesh Aggarwal, a surgeon, focused on silver bullets during a discussion with financiers about a startup he founded that focused on metabolic health. “Tell me if I invest in this, I’ll make it 10x,” he told the bankers. Many want to “also do good” for patients, he said.
Aggarwal felt that the investors were looking for simple solutions to health problems. And one item fits that bill: a new class of drugs — GLP-1 agonists, a type of drug that helps with weight loss but probably has to be taken for a long time. Some analysts are estimating that these drugs are worth $50 billion. The banks, Aggarwal felt, “are not thinking about healthcare,” they are “thinking about the dollars associated with medicine.”
KN (Kaiser Health News) is a national, editorially independent program of the Kaiser Family Foundation.
Copyright 2023 Kaiser Health News. To see more, visit Kaiser Health News.
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