SAN FRANCISCO — Healthcare’s business class returned to the San Francisco mecca last week for JPMorgan’s annual healthcare conference on Gilded Westin Street. The Francis Hotel on Union Square. After a two-year hiatus from the pandemic, the mood among the executives, bankers and startup founders in attendance had an air of reunion — they gossiped about promotions, the work-from-home routine and who got what. invest. Dressed in capitalist regalia—from bright blue or lavender blazers to sleek puff coats—they flock to big parties at art galleries and restaurants.
But the party was stained with new anxiety: Will the big money pouring into health care due to COVID-19 continue to flow in? Will investors demand results — that is, profits — and not just cool ideas?
The lively session was as much about profits as it was about patients. Most of the unmasked crowd speaks English, French, Japanese — and, of course, money.
Beyond the types of companies and investments, attendees often saw surprising personalities — like celebrity doctor Mehmet Oz, fresh from a Senate defeat, in the halls on Jan. 17. 10.
If the mood in the hotel’s crowded lobby was upbeat — or, at least, cheerful — underneath was a shudder of anxiety, as the well-known health-care boom seemed to be slowing.
The meeting kicked off with a sidewalk protest from Gilead Sciences, the pharmaceutical company whose drugs to fight HIV and hepatitis C are highly effective — and very expensive. For the first time during the pandemic, Congress enacted a plan to allow Medicare to negotiate U.S. drug prices, by far the highest in the world. In a statement, company spokeswoman Catherine Cantone said Gilead is the largest private funder of HIV programs in the United States, adding: “Gilead’s role in ending the HIV and hepatitis epidemic is to discover, develop and ensure access to our life-saving drugs.”
“Tough year”
Then there’s the economic environment, which is getting dangerous. Reporters for the financial publication Bloomberg diagnosed the lack of exciting deals. Startup executives — who previously found multimillion-dollar investments easy to come by — seem to have to show the results in impromptu pitches at bars and coffee shops. Business executives from all walks of life are promising that they are either profitable or will be… soon.
“I think it’s been a tough year,” Hemant Taneja, chief executive of venture capital firm General Catalyst, said on a panel. He said that a large number of health technology startups are overvalued, and their customers will be more interested in whether they actually provide a useful service.
The new message from potential investors is clear. “The idea that you can grow and not make a profit is dead, gone,” says Dr. Jon Cohen, CEO of mental health startup Talkspace, said in an interview.
Some tried to celebrate economic and humanitarian successes. BioNTech co-founder Uğur Şahin was interrupted by applause during his speech as the developer of the mRNA vaccine spoke with Pfizer about the vaccine’s role in the fight against the pandemic. That was before he touted his company’s role in reducing infectious disease, saving lives and meeting global health needs for tuberculosis and malaria.
The conversation later turned to pricing for his company’s flagship vaccine — which it is trying to price at more than $100 a dose, above the average government purchase price of $20.69. A hundred dollars is a reasonable price given the “health economics,” says Ryan Richardson, BioNTech’s chief strategy officer: hospitalization and serious consequences are avoided.
Brainstorming comments
There was some cognitive dissonance at the meeting. Take drugstore giant CVS — which is steadily expanding its retail presence into health insurance and primary care. CVS Health CEO Karen Lynch said that as part of its health business, the company is looking at all the factors that make up the foundation of health. “Health isn’t just about provider engagement; it’s about all the other factors — including housing and nutrition,” she said. What no one cares about is what CVS customers often see when they enter the store: candy, chips and other processed foods.
For critics, this is a puzzling review. “The last time I heard, CVS was a for-profit company, not a social welfare agency,” said Marion Nestle, a researcher and longtime food industry critic. “It’s selling junk food that makes people sick and drugs to treat those diseases. How’s that for a nifty business model!”
CVS spokesman Ethan Slavin offered a very different vision, one that CVS is seeking to become a premier health and wellness destination. “We’re always improving our food and drink assortment to offer healthier, on-trend products.” It also supports plans to increase food availability in underserved areas, he added.
Some technologists have renewed skepticism about “artificial intelligence.” Jason Kelly, co-founder of Ginkgo Bioworks, noted in his presentation that attendees heard so much about AI during the conference that “they want to stop hearing about it.” (Ginkgo’s AI is used to support pharma and biotech, he said. research, unlike other companies.)
A surgeon, Dr. Rajesh Aggarwal finds that when talking to financiers about his secretive metabolic health-focused startup, the focus is on panaceas. “Tell me, if I invest in this, I’ll pay out 10 times,” he said in banker’s words. Many wanted to “do something good too” for the sick, he said.
Aggarwal thinks investors are looking for simple solutions to health problems. One fits the bill: a new class of drugs — GLP-1 agonists, a class of drugs that help with weight loss but may need to be taken long-term. Some analysts expect the drugs to be worth $50 billion. Aggarwal argues that bankers are not “thinking about health care” but “thinking about the dollar associated with the pill.”
KHN (Kaiser Health News) is a national, editorially independent program of the Kaiser Family Foundation.
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