WTM Bulletin #11: From Wall Street to Care Street. Latest musings on Health Care Venture Capital, Private Equity, and Care Delivery. Innovation. Transformation.
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6 topics = 3 headlines. 2 startup or VC/PE firm news. 1+ closing thoughts. Follow me on twitter @Mahek_MD
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HEADLINES
J&J dives deeper into cardiovascular medical device, seeking to enter this high growth area and position itself as a cardiovascular innovator.
Johnson & Johnson is buying medical device company Abiomed for $16.6B. J&J will initially pay $380 a share for Abiomed, representing approximately a 51% premium on the company’s Monday close price. J&J will pay an additional $35 a share if the company meets certain milestones. The transaction is expected to close by the end of Q1 2023.
More:
- J&J CEO Joaquin Duato noted that the acquisition is consistent with the company’s overall strategy of expanding its med tech business into high-growth markets and boosting its revenue.
- J&J’s medical device unit was once its largest business by sales but has been replaced by its pharmaceutical unit.
- Abiomed makes the Impella heart pump used to treat various heart conditions, including heart attacks and clogged arteries.
- Abiomed reported $1.03B in total sales for its last fiscal year, which ended on March 31.
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Pomegranates, rich in antioxidants, strengthen the immune system to fight cancer
A substance found in pomegranates strengthens the immune system’s response to cancerous tumors. The findings come from a new study published in the journal Immunity by a team based in Frankfurt, Germany.
More:
- Pomegranates contain large quantities of the metabolite compound urolithin A.
- The German team studied urolithin A in an effort to understand how to avoid the surrounding tissue of colorectal cancer tumors from suppressing T cells, a crucial part of the human immune system.
- The researchers discovered that urolithin A rejuvenates and changes the genetic constitution of mitochondria in T cells, allowing them to respond to tumors more effectively.
- Consuming pomegranates could function as a preclinical therapy that stems the growth of tumors and reinforces other treatments, the study suggests.
- Based on their findings, researchers intend to begin clinical trials that use urolithin A to treat people with colorectal cancer.
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CVS, Walgreens, and Walmart settle opioid lawsuits
- Here are the settlements: CVS said it would pay $5 billion over 10 years, Walgreens $5.7 billion over 15 years, per SEC, and Walmart has agreed to pay over $3 billion, most of it up front, anonymous sources told Reuters. Drugmakers and distributors have agreed to a total of $33 billion in settlements.
- CVS, Walgreens and Walmart are America’s largest pharmacies by market share, so the settlements — if approved — would resolve many years long legal battles. Cases against smaller, regional pharmacies remain.
- A settlement fight with Purdue Pharma, accused of igniting the crisis by pushing OxyContin sales, is ongoing. The Sackler family, which owns Purdue Pharma, wants to be shielded from further litigation.
- About 650,000 overdose deaths have been blamed on opioids since 1999, and the crisis is still worsening, based on CDC data.
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Amazon and Apple pause hiring of corporate workforces. Two of the world’s largest companies today reported statements that they will pause new hiring in corporate roles.
Apple will put this policy into place until end of fiscal 2023, September 2023. Amazon is monitoring economic conditions and will update employees accordingly, per Andy Jassy memo. Here’s the full memo from Amazon:
Here’s the full memo:
With the economy in an uncertain place and in light of how many people we have hired in the last few years, Andy and S-team decided this week to pause on new incremental hires in our corporate workforce. We had already done so in a few of our businesses in recent weeks and have added our other businesses to this approach. We anticipate keeping this pause in place for the next few months, and will continue to monitor what we’re seeing in the economy and the business to adjust as we think makes sense. In general, depending on the business or area of the company, we will hire backfills to replace employees who move on to new opportunities, and there are some targeted places where we will continue to hire people incrementally.
We’re facing an unusual macro-economic environment, and want to balance our hiring and investments with being thoughtful about this economy. This is not the first time that we’ve faced uncertain and challenging economies in our past. While we have had several years where we’ve expanded our headcount broadly, there have also been several years where we’ve tightened our belt and were more streamlined in how many people we added. With fewer people to hire this moment, this should give each team an opportunity to further prioritize what matters most to customers and the business, and to be more productive.
We still intend to hire a meaningful number of people in 2023, and remain excited about our significant investments in our larger businesses, as well as newer initiatives like Prime Video, Alexa, Grocery, Kuiper, Zoox, and Healthcare.
If you have questions about how this pause on incremental hiring for the next few months impacts your team, please speak with your manager in the coming days.
Beth
VENTURE CAPITAL / PRIVATE EQUITY
Flare Capital Partners teams up with Hospital of Special Surgery (HSS) to launch RightMove, a modern day MSK startup with Value Based Care as its True North.
RIGHTMOVE:
RightMove powered by HSS launches with $21 million Series A investment will be used to build out RightMove’s technology platform and create a nationwide network of specialty-trained physical therapists. RightMove expects to be live by late Q2 2023.
This is an interesting move, particularly by arguably the world’s leading leading academic medical center specializing in musculoskeletal health. It shows that they are aware of the unicorn startups Hinge Health, Sword Health, and Kaia Health which have achieved exponential growth and valuations with substantial venture capital investment. HSS might have seen some decline in volume and patients who would usually seek HSS out resort to these new crop of virtual and more convenient care options.
It’s exciting news and will be interesting to monitor. As my good friend, Dr. Benjamin Schwartz has said on the announcement:
But traditional MSK has an advantage that digital MSK doesn’t: the ability to control and guide the patient journey from start to finish — providing full spectrum, integrated care under one “platform.” As employers and insurers fight fragmentation and solution overload, this advantage is significant.
As William Kurtz, M.D. has elegantly argued in the past, virtual PT, health coaching, and patient optimization are easily commoditized and hard to differentiate. Avoiding procedures as a value proposition can only get you so far. Complete value generation comes from delivering high-quality, cost-effective interventions when indicated. Traditional Orthopedic providers are better suited to provide 360-degree care. And now, it seems, they’re finally showing an interest in perhaps doing so.
Not everyone can be HSS. There may be a role for digital MSK companies to partner with brick-and-mortar Ortho that doesn’t want to build their own solution. But demonstrating ROI and hitting on the right value proposition can be tricky.
In summary, the big advantage HSS and other hospitals like it and curating and owning the end-to-end experience with the highest quality and best doctors on staff. These billion dollar virtual care companies only see or influence part of that journey. Employers prefer a one-stop shop solution to eliminate, minimize their decision making of who to partner with because they are in the business of building their products and services, not employee benefits (though it is one of their most expensive line items).
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CLOSING THOUGHTS
Advertising Revenue as a % of GDP has not changed since 1925! It remains at 1.3%. What has changed is who and where that pie is being allocated to. In the mid 20th century, it was network television companies that became global juggernauts CBS, NBC, ABC, and later CNN, FOX, CNBC, Bloomberg. Since the 2000s, we’ve seen digital advertising take more and more share from the legacy players as consumers taste and behaviors changed. We’ve gone from organizing our days around Friends, Thursdays at 7pm EST and ER at 8pm EST, to flipping the model: on-demand streaming, when we want to watch and consume media, with advertising evolving with it. How?
From corporations spending ad dollars over to the big media companies to ad spending on Meta, Amazon, Google, and Apple. But a new player has emerged. TikTok, owned by ByteDance. The chart tells the story themselves. The Apple story seen below is the impact of their embrace of privacy, moat control, and sheer dominance in the world of consumer products and influence of their App Store.
You may ask, SO WHAT? How does this impact healthcare? Well more and more stakeholders from pharma to payers are leveraging digital advertising to reach patients, providers, partners, etc in order to sell more products and services.
Whether it’s pharma trying to reach HCPs or patients online, digital advertising is part of a core strategy for these organizations to build trust, brand awareness, and a bond to convince them and their HCP aka doctor to prescribe the medication they want. Additionally, they want to leverage the social data to better understand who their target customers are, where do they spend their time, how do they spend their dollars, in order to build the aforementioned qualities of becoming a partner in care versus a seller of a product for their care. Digital is where more and more people are spending their time so companies are geared up to meet people where they are at.
But what we are seeing from this shift in where people are spending their time will result in chaos because many times, corporations budget their ad spend annually and this shift to TikTok can be disruptive in the sense of very few people in marketing at corporates consumer TikTok. It’s likely their children do. So we will see who ends up delivering effective and meaningful content with an ROI on TikTok. Will it be pharma selling a drug? Payers selling a Medicare Advantage plan? We will see.
Even in tougher times and contraction at all levels, leveraging technology is still a great investment and needs to continue in health care delivery.
We are all seeing the headlines from Google, Microsoft, Amazon, Meta, and Apple last week with earnings. It was a very tough and humbling week for shareholders, myself included.
However, technology fitting into an existing workflow and then assisting to adapt the workflow as it evolves is still one of the most important ways to transform our healthcare system. I firmly believe that. Just look at how technology has played a role in how we hail a cab, grab dinner, date, purchase anything, write, read, and watch. And yes you can throw the cliche: “Healthcare is different.” But to the consumer, it is not that different. Yes it is much more personal, deeply emotional, but at the same time is should be easy to navigate, affordable, accessible, and more importantly convenient. That is what technology can accelerate. Making things much more convenient.
Because at the end of the day, a young healthy person wants convenient care more than a deep relationship with their provider. They want to be in and out so they can get back to their lives, where health might be 4th or 5th on the list.
However to my elderly parents or yours, health is likely top of mind, because you just have to address and deal with the fact that your body breaks down much more often so requires more maintenance. That might be dealing with a low acute chronic disease, an acute exacerbation, booking an appointment, or refilling a prescription. So there tends to be a strong desire to have a relationship with a specific Physician, a specific clinical team, that knows YOU and can help manage you and help you navigate the strange waters of healthcare delivery.
If any of this resonates with you and you’ve gotten this far down, please leave a comment or tell me what you think. I would love to hear from you.
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Disclaimer: The information presented here does not serve as investment advice. This is for informational purposes only.
Author biography:
As a former Citigroup investment banker and economist turn Medical Doctor, entrepreneur, consultant, and investor, I see health care evolve and transform through a very unique lens.
Sitting at the intersection of health, technology, and business with functional roles as an executive in strategy, partnerships, and innovation, I’m eager to share my weekly findings with you, my growing worldwide audience.
Please subscribe and feel free to leave a comment below. I sit at the intersection of Wall Street. Tech. Medicine. I’m an MD with Buy-side, Sell-side, & Bedside Manner. Alumni and faculty networks from Harvard, Cornell, Baylor College of Medicine, and Rice. I’m the world’s only Doctor to work with all 3 modern business icons Michael Porter, Robert Kaplan, and Clay Christensen. You can find me on twitter @Mahek_MD .
