| DEALFLOWUPDATE Issue #37. Saturday, August 3 |
Hello Everyone, In this edition of the Zoic newsletter, we’ve invited Zoic Senior Advisor, Steven Stack, to discuss a macro look at healthcare politics and economics as a backdrop for biotech innovation. We felt his former role as the President of the American Medical Association and more than 20 years of clinical, administrative, and healthcare advocacy experience would offer readers a unique opportunity to learn more about the perspectives we think critically about during our deal flow diligence process. -Neal If this is your first issue, please subscribe and consider sharing with others. Additionally, we welcome news from our readers, if you’re up to something interesting, let us know. Email chad@zoiccapital.com |
Dealflow  Targeting Biotech Innovations To Empower Patients -Guest post from Zoic Capital Senior Advisor, Steven J. Stack, MD, MBA Hello Everyone, As Neal mentioned, this edition of the Zoic newsletter will take a macro look at healthcare politics and economics as a backdrop for biotech innovation. But first, by way of personal introduction, I’m a Zoic Senior Advisor and practicing emergency physician with more than 20 years of clinical, administrative, and healthcare advocacy experience. I also currently lecture on healthcare policy and advocacy as an adjunct professor at the University of Tennessee Haslam College of Business. And now, let’s talk politics. As the 2020 presidential campaign ramps up, news and social media are abuzz with talk of Medicare-For-All in the United States. Were this to occur, it could dramatically change the biotech landscape, but it’s not likely any time soon. Even among proponents, there’s no consensus what “Medicare-For-All” means. Some proposals are incremental expansions of Medicare or Medicaid, others create a new public option through the existing Affordable Care Act (ACA) marketplace, and still, others propose a compulsory single national health insurance program for all U.S. residents. These divergent proposals make legislative compromise difficult even among supporters, to say nothing of the intense opposition they will encounter from critics. Even if proponents align, legislative math stands in the way. To become law, a bill must achieve 218 votes in the house, 60 votes in the Senate, and 1 signature from the president. A simple majority in the senate is insufficient because senate rules of procedure require a 60-vote supermajority to start and stop debate. As long as no single political party controls all three magic numbers, i.e. 218-60-1, the minority party in the senate can obstruct items with which it disagrees. And, though political analysis is often inconsistent, there is no likely 2020 scenario in which either party will achieve this level of control. Though there will be plenty of political fearmongering, there will not be any near-term switch to single-payer healthcare in the United States. For the foreseeable future, even with private sector consolidation, the U.S. will maintain a massive, fragmented, and growing health sector that in 2017 consumed >$3.5 trillion, roughly 17.9% of GDP In fact, if the U.S. health sector were a nation, it would be the 5thlargest GDP in the world. That’s a lot of economic activity and it’s very unevenly distributed. In a typical year, the top 5% of healthcare consumers account for roughly 50% of total costs while the lower 50% only accounts for 3% of expenditures. Persistently high-utilizers tend to have low-frequency, high-cost conditions such as HIV, cystic fibrosis, multiple sclerosis, inflammatory bowel disease, arthritis, etc. Patients with these high-cost, chronic, and debilitating conditions need biotech innovations that improve care while lowering total cost. Better diagnostics, more effective therapeutics and enhanced monitoring tools to manage these diseases offer countless opportunities for targeted innovation. Alternatively, tens of millions of Americans have high-frequency, moderate cost diseases such as hypertension and diabetes that result in impaired health and hundreds of billions of dollars of annual costs. Targeted biotech innovations that empower patients to better manage these diseases and their complications (i.e. heart failure, kidney disease, vascular complications, etc.) at home or at a distance are in high demand. There are >300,000 mobile healthcare apps promoted to facilitate self-monitoring, self-diagnosing, treatment compliance, etc. Opportunities abound to connect directly with consumers or to help clinicians and hospitals better engage with patients to lower total costs through remote monitoring and better coordinated care. And, for the biotech innovator with a novel diagnostic or therapeutic approach, wrapping their innovation with an engaging mobile app offers the opportunity to expand the reach of their IP to simultaneously serve multiple customers (i.e. patients, clinicians, hospitals, health plans, etc.) and enlarge their addressable market. With this much economic activity and so many innovations, it takes a large deal-flow funnel and disciplined approach to identify successful and sustainable solutions in the healthcare marketplace. Each year at Zoic, we review more than 1,000 early-stage companies to identify the small handful that possess the differentiated IP, substantial platform potential, and exceptional management teams necessary for success. All the best, Steve What We’re Reading FIERCE HEALTHCARE Major market disruptions abound but often don’t come easily: Amazon vs. Surescripts in the pharmacy segment UTK Some innovations are remarkably low-tech: A tiny plastic box to prevent big problems URBAN INSTITUTE If Texas v. United States overturns the entire Affordable Care Act, 20 million Americans may lose insurance. Here’s who would be impacted the most COMMONWEALTH FUND American’s can’t agree on how to pay for health care. How do other nations handle this? Use this Interactive tool to compare Connect With Zoic Capital |
| The Biweekly Dealflow Update, curated by the team at Zoic Capital. |
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