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Brainstorm Health: Health Care Prognosis, Novartis Eye App, Alcohol and Mouth Bacteria

Good morning. I have a treat for you today. Two of the most insightful investors I know—Venrock partners Bryan Roberts and Bob Kocher—are giving Brainstorm Health Daily readers a sneak peek at their 2018 Health Prognosis, which is compiled from their survey of 300 savvy insiders in the field. You can download the whole thing here, but for some well-chosen highlights—and a few timely words of wisdom from Bob and Bryan—read on:

Venrock’s 2018 Health Care Prognosis

For a second year, we canvassed our network to take their temperature on happenings and innovation in the healthcare delivery ecosystem. We asked a few new questions on the latest trends and repeated some questions to see if sentiments had changed. We came away with three key insights from the results:

Transitioning from point products to platforms

We share the excitement of the respondents around new platforms that attack inefficiencies and inequities in care delivery and total cost of care via novel tech-enabled services. Medicare Advantage insurance companies Bright Health and Devoted Health, as well as care delivery companies Iora and One Medical, were the financings people regretted missing. Respondents were pessimistic about wellness, sensors, analytics, and consumer products. These results also appear to reflect a shift away from businesses targeting commercially insured patients, towards businesses targeting the sicker elderly, perhaps given the larger potential savings and care improvements available in the latter population.

Which early stage financings do you regret not having been in?

36% Devoted Health

24% Collective Medical

23% Bright Health

13% Solv Health

13%Stride Health

12% Other

10% Babylon Health

9% Artemis Health

9% Wellframe

8% Progyny

7% WelbeHealth

6% Buoy Health

4% Kinsa

Reality lags headlines (by a lot…)

Two of the most hyped topics of the year have been Amazon, Berkshire Hathaway, and JP Morgan’s (ABJ’s) “bold” move into healthcare, and the promise of Artificial Intelligence (AI) to make healthcare better (along with everything else). While both of these hold potential long term promise, our respondents were skeptical that they would generate impact anytime soon, despite the near daily stories. Nevertheless, respondents were optimistic that both Amazon and Apple (obtusely) would make headway in 2018 and perhaps matter more in the future. In the near term, respondents were much more hopeful that a robust private capital market will continue to fuel growth among private healthcare IT companies, and that we could see IPOs from the likes of One Medical, Health Catalyst, and Grand Rounds.

What has been the most important healthcare event?

51% Survival of the Affordable Care Act

22% CVS/Aetna deal

16% Amazon/Berkshire Hathaway/JP Morgan partnership

1% Scott Gottlieb becoming FDA Commissioner

Policy gridlock leads to uncertainty

Last year, our respondents correctly predicted that the Affordable Care Act would not be repealed. This year, they predict that the number of insured Americans is likely to grow, despite the removal of the individual mandate. This could result from a belief that more states will expand Medicaid under more permissive Republican waivers, with work requirements and cost-sharing. Respondents are pessimistic about the development of new policies to curtail drug prices and hospital market power. The administration’s current policy regarding immigration is likely the reason respondents are more worried about attracting talent than in the past.

How concerned are you about the impact of talent/hiring on healthcare IT innovation in the next 12 months?

25% Very concerned

46% Somewhat concerned

22% Neutral

7% Not at all

For more detail and the actual data please click: http://hcprognosis2018.venrock.com/. We look forward to looking back in 2019 on these results to evaluate the wisdom of this crowd.

Bryan Roberts and Bob Kocher are Partners at Venrock.

Clifton Leaf, Editor in Chief, FORTUNE
@CliftonLeaf
clifton.leaf@fortune.com

DIGITAL HEALTH

Proteus is seriously ramping up its digital medicines pipeline. Proteus Digital Health made waves when it received the first Food and Drug Administration (FDA) approval for a digital pill—a treatment that includes an ingestible sensor which helps patients (and, if patients want, their care providers) track whether or not they’re taking their medicine. Proteus’ technology is already used by certain health systems for other diseases like hepatitis C and HIV, too, as we explored in our recent feature on big data in medicine. On Wednesday, the company announced that it’s seriously ramping up the digital medicines pipeline and has 31 such products for everything from mental health to cardiovascular diseases to cancer. More on this to come.

Novartis keeps the focus on digital with eye disease app. Swiss drug giant Novartis on Wednesday launched a mobile app to aid data collection in clinical trials for people participating in eye disease studies. CEO Vas Narasimhan has been a digital pharmaceutical evangelist (he’s told me on multiple occasions that using mobile technologies to improve clinical trials and the drug development process is one of his key goals for the company and the industry’s wave of the future). Such tech could let study participants skip the cumbersome trip to the doctor; Novartis’ app uses Apple’s ResearchKit. (Reuters)

INDICATIONS

Takeda inches closer to scooping up Shire. Japan’s Takeda appears to be on the cusp of a $65 billion deal to buy rare disease drug specialist Shire in what would make for the year’s biggest blockbuster biopharma M&A. Takeda had been spurned multiple times by Shire, forcing the company to up its cash-and-stock offering. But not all analysts are convinced that the deal will receive overwhelming support from the parties’ boards. “The risk to the deal is unlikely in our view to come from Shire shareholders or anti-trust authorities,” said Bernstein’s Ronny Gal in a research note. “However, Takeda shareholders (and potentially the board) may prove resistant given the stock decline.” (Endpoints News)

THE BIG PICTURE

Drinking alcohol may change the bacteria in your mouth. A new study suggests that regular, heavy drinking can change the very microbiome (i.e., the collection of various microorganisms that reside in the body) of your mouth—and not in a good way. Researchers found that drinkers generally had less “good” bacteria in their mouths and more of the “bad” bacteria. (Forbes)

REQUIRED READING

There Are Now More Women in Congress Than Ever Beforeby Natasha Bach

Twitter and the Trump Effect: Tracking the Mobile User Numbersby Chris Morris

BirchBox CEO-Turned-Investor Hayley Barna Discusses Top Founder Mistakesby Polina Marinova

What to Do If Your Car Is Affected By the Massive Audi Recallby Aric Jenkins

Produced by Sy Mukherjee
@the_sy_guy
sayak.mukherjee@fortune.com

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