Dr. Ash Patel discusses three of the biggest macroeconomic trends in healthcare: an aging population, expanding markets in emerging economies worldwide, and the growth of usable medical databases.
EDITOR'S NOTE: Expanesthetics lies at the intersection of two of these trends.
Large biotech companies have been providing lower total shareholder returns (TSR) when compared to smaller biotech companies, and the reason may be that smaller biotech companies are able to focus on a particular category and better understand the needs and value drivers of that category.
Investments in biotech are on the rise with a 20% increase in venture funding for biotech companies in 2015 compared to just 7.7% increase for software companies. Although software companies are still receiving more investments ($5.1B in the first three months of this year, compared to $1.8B for biotech companies), the business model of the drug industry has been changing, shifting its focus from in-house research and developing to outsourcing its R&D through acquisitions, partnerships, and joint ventures.
List prices of pharmaceuticals are continuing to increase despite criticism from Congress. Because large increases in list prices commonly result in only modest increases in the price that insurers and employers pay, those that pay out-of-pocket bear the brunt of price increases. A lack of competition in specialty areas of medicine where there are few treatments allows for particularly high pricing power.
According to the report, while Neurology is the third best venture-funded class of therapeutic and pain is the most significant part of that, venture funding for neurology overall has declined about 30% since the previous five year period from 2003-2008. "Pain continued to be the most funded sub category, accounting for 30% of the Neurology funding in 2014. Over the last ten years, Pain has accounted for 42% of Neurology venture funding."