Popper and Company Ponderings on the Year Ahead in Healthcare
December 22nd, 2014
Posted by Caroline Popper, M.D., M.P.H.
At this time of year, many folks look back at the year that was. And indeed 2014 was an interesting year in healthcare.
We, however, prefer to look forward. Every fortuneteller brings her point of view to table. We do, too! We believe that healthcare can be improved by taking a macro and a micro view…one innovation at a time…but always focusing on improving overall efficiency and increasing customer satisfaction. Healthcare is rapidly adopting the imperatives of other markets…so maybe it’s not such a unique industry after all!
Here’s what we expect in 2015:
1. More big “landscape” changes will be coming.
“We think of Starbucks not as a coffee company but a media company.” (Howard Schultz, Starbucks)
The balance of power will continue to shift as some traditional big healthcare players fade away and giants from other industries – as well as new kids on the block – set their sites on the business of health. For example, next year Eli Lilly and Company will drop out of the rankings of top ten international pharmaceutical companies–booted out of its tenth place spot by Actavis plc.
Actavis? Born of a deal with Watson Pharmaceuticals, the company has been the most active drug-company buyer since January 2011 and recently won a battle over the purchase of Allergan. The Actavis CEO is young (43) and driven by a clear strategy to become a top ten company. Is it unrealistic to wonder if he could crack the top five in the next five years? Let’s keep an eye on Actavis.
Not only are new healthcare companies climbing the rakings, but IT, telecom, and tech companies will continue their expansion into healthcare. Google’s venture arm now invests more in healthcare than in any other industry. And big “distributors” will become healthcare purveyors (e.g., Wal-Mart, McKesson, and Amazon). Will we soon see our prescriptions delivered via drone?
2.The shift in how healthcare decisions are made and how healthcare is delivered will become irreversible.
The patient will not be a patient consumer: She will no longer be just “considered” (c. 1900) or “engaged” (c. 2010), but will need to be “catered to” (c. 2015). We will, therefore, see a variety of patient-centered tools. We also will see continued adoption of customer service models used in other industries, more transparency in pricing and process. Consumers will price shop; industry will have to make a better case for quality and features to justify premium pricing. That toothpaste can’t be put back into the tube.
We anticipate that for both products and services we will see accelerating bifurcation into two big categories: “very personal” (e.g., personalized drugs, concierge services) and “very generic” (e.g., “super generics” and retail health). The doctor-patient relationship will continue to change: consumers will continue to tell us that convenience matters, and, as in other industries, we should expect to see the internet play a large role in improving efficiency. Even the medical supplier Welch Allyn is getting on board (see its recent acquisition of remote patient monitoring company HealthInterlink…taking healthcare right into the home). It may not be long before we hear: “The doctor will Skype you now.”
3. Digital Health will start to grow up.
We predict that 2015 will see a significant change in the digital health “wearables” landscape with growth slowing and some players dropping out. In 2015, the winners will need to impedance match the best technology ideas with the most compelling healthcare and consumer needs. To break out of the pack, one or more manufacturers must deliver functionality that makes their device an essential rather than a novelty that is used for a few months then left on the dresser. The wildcard is, of course, the Apple Watch; but, early indications are that it will not offer much more to the health landscape (in some cases less) than Fitbit, Jawbone, and other personalized fitness wearables. Will the Apple Health Kit finally solve vexing interoperability challenges? In the end, after all, it’s not the technology that matters, but what it enables…
“I know nothing about technology.” (Jack Ma, Alibaba)
4. (Drug) pricing will be front and center, fueled both by concerns about sustainability and by the patient/consumer taking a dominant position in purchasing decisions.
“There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.” (Jeff Bezos, Amazon)
At what price will real therapeutic innovation come? We see a year of passionate debate about the cost of innovation in healthcare. While high-priced specialty drugs are certainly not newsmakers in and of themselves, the dramatic increase in the portion of healthcare spending related to their use is going to continue to fuel debate.
In 2012, specialty drugs represented 1 percent of all prescriptions but 25 percent of the $265 billion spent on prescription drugs in the United States. Historically, certain drugs and other high-priced medical interventions indicated for small groups of patients may have managed to fly under the radar of our national consciousness. What’s different about Gilead’s Solvadi and Harvoni is that they are indicated for large populations…rather than the high priced but limited use of therapies and interventions such as heart transplantation. And while their cost effectiveness is clear, we foresee vigorous debate against the backdrop of Gilead’s direct-to-consumer ad campaign.
This backdrop will certainly engage all of us in the debate about value, sustainability, choice, cost of innovation and trade-offs.
5. Diagnostics, long regarded as “the handmaiden of therapeutics,” will more accurately be positioned as “the real power behind the throne” calling the shots in healthcare.
The power of diagnostics will be delivered through new tools (NGS-mass spec combo, for example) and through the tremendous opportunities afforded by data analysis, interpretation, etc. Diagnostics will henceforth truly be an information business…and the big information players will get into the game here, too (see Google above). The ubiquitous sensors generating petabytes of data are just the start. The value will come to those who develop the algorithms and interfaces that turn that data into clinically relevant knowledge.
6. Many innovations will debut.
We will see increased adoption of personalized immunotherapies combined with better predictive diagnostics to exclude patients who might experience autoimmune toxicity or cytokine-associated toxicity. A combination of diagnostics and improved clinical trial design may save some blockbuster immunotherapies from the scrapheap of death by toxic side effects.
Combination therapies for cancer will gain prominence: tumor sequencing already provides useful clues about which targeted therapies might be the best for treating a given cancer based on a tumor’s genetic makeup. However, this information may not be sufficient and may need to be supplemented with functional genomics, epigenetics and micro-scale combination drug testing on primary tumor samples to drive personalized therapy for many types of cancer.
Further, 2015 may be the year in which we see:
- significant prescription-to-over-the-counter switches,
- almost every pharma company exhibiting interest in a companion diagnostic for its product to cement its place in the market
- the full recognition of RNA as a therapeutic,
- progress of stem cells towards routine clinical use,
- reduction to practice of single cell analysis,
- integration of microbiome studies deeply into drug development and initial evaluation in clinical practice,
- recognition of the importance of epigenetics alongside genetics, and
- the emergence of carefully selected digital and mobile tools from their fascinating infancies to becoming real enablers of cost-effective consumer-centric healthcare.
- telemedicine enters routine care: no longer just used where there are very few people in big spaces (Australian outback) or lots of people and few providers (India), telemedicine is set to go mainstream: if we needed even more evidence for this…how about Sir Richard Branson jumping in (NYT Dec 21)!
That’s what we are anticipating unwrapping in 2015, how about you?
In closing, a colleague recently shared an anonymous quote with us that puts an exclamation point on our thoughts on the future of healthcare:
“When the velocity of change in the market exceeds the velocity of change in the business, the end is near.”
Velocity is a function of both speed and direction. In healthcare, both are clearly changing: we would like to help you address both and thus remain highly relevant.
At Popper and Company, we constantly search for answers to the healthcare challenges of today—and tomorrow. We can help you create new strategies, ideas, and inventions, sometimes by thinking a bit unconventionally. To learn more, please follow us on Twitter, or send me an email.
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