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- The Biopharma Revolution
The start of the new year brought us the launch of our ETF! With all of the work to be done in the wake of the launch, our January newsletter was a bit delayed. However, since the last newsletter we’ve published three new articles that are ready for reading and discussion.
This newsletter discusses more in depth the biopharma sector, recent events that have affected the space, and what’s likely to come in the future.
“…we’re in a golden age of science, propelled forward by transformative computational technologies.”
In case you missed it:
Our ETF is LIVE!
We are proud to say that we are the first ever pure play HealthTech ETF on the market.
[insert happy dance 🕺]
To learn more about the fund, it’s holdings, and performance, check out the official fund website:
Feel free to reach out if you have specific questions at [email protected].
Let the 2024 investing season commence!
Public Market Update: Average Sector Performance of All HealthTech Companies
Let’s first take a look at the HealthTech market.
We’re off to a more red start this year than we were last year, but I think some variability is to be expected as the post-pandemic dust settles.
Why?
Because healthcare decision-making and spending is shifting due to:
🤖 The infusion of AI into clinical practice & administrative tasks 📃Changing policies around costs & reimbursements (e.g. Inflation Reduction Act and drug negotiations) | 💵 Reduced, or re-focused, VC funding in different healthtech subsectors 🏥 The merging of hospitals or buyouts via private equity |
Plus the start of the year signals a reset for insurance deductibles. Not only that, but many Medicaid exceptions that were in place for coverage during the pandemic expired last year. The one year grace period that states had to un-enroll patients is coming to an end, leaving more folks without insurance, or pushing them to sign up for coverage through the Affordable Care Act.
As such, those without insurance won’t be seeking care to avoid out of pocket expenses.
It’s a complicated time, and it will be interesting to see how the rest of 2024 unfolds!
Learn more about each sector by clicking here: |
Articles Worth Reading
The HealthTech Biopharma Revolution
This month we reveal 2 new articles on the site discussing the ins and outs of the Biopharma sector.
The first article takes a closer look at how a subset of private Biopharma companies leveraging AI/ML and other advanced computational tools in drug development has gained a larger share of investment within the industry, showing resilience amid strong headwinds.
The second article analyzes the different drug development pipelines to better understand what is currently underway and what the biopharma future holds.
The recent rally in the S&P Biotech ETF (XBI), triggered by anticipated interest rate cuts in 2024, is expected to permeate the private Biopharma markets. However, uncertainties around the timing, scale, and probability of these cuts suggest tough times may continue in the first half of 2024.
Elevated drug costs ultimately affects patients and is an important issue when considering the growth of biopharma companies and the production of new medications.
Understanding how companies are using healthtech to combat issues, stay relevant in the marketplace and adapt to changing policies, allows for a better understanding of how the subsector is growing and evolving and how it can affect your investment.
Related content: The HealthTech Biopharma Revolution: From Promise to Reality?
Opinion
An Expert’s Perspective
Biopharma has weathered a stormy 2 years, grappling with a high-interest environment that has led to a significant contraction in funding for the high-risk, capital-intensive sector. Despite positive news from the Fed regarding interest rate cuts and a recent surge in large M&A deals sparking a rally in the S&P Biotech ETF (XBI), sentiment remains cautiously optimistic, evident at this month's JP Morgan Healthcare conference.
In the current capital-constrained environment, both public and private Biopharma companies find themselves at a crossroads, compelled to make difficult decisions such as pausing or terminating programs to extend their cash runway. Yet, this painful process carries a few silver linings improved resource allocation, departure from overcrowded science, and long-overdue consolidation. While the outsized returns of the pandemic may have faded, it's crucial to recognize that this correction is steering the sector toward a healthier state, signifying a positive evolution rather than merely a setback.
Against this backdrop of heightened efficiency, the potential of AI/ML and other advanced computational tools becomes even more pronounced. These technologies aim to:
Expedite drug discovery and development (typically takes 10+ years on average)
Address rising R&D costs (exceeds $1B+)
Tackle consistently high failure rates (9 in 10 drugs fail clinical development)
HealthTech Biopharma companies that have developed powerful computational platforms for everything from target identification and lead optimization to biomarker development are drawing increasing capital and attention amid the broader excitement around AI. We’re already seeing the first AI-designed drugs enter clinical trials as a testament to the sector’s technological strides in recent years. The pace of scientific innovation shows no signs of slowing either and it’ll be exciting to see the innovative ways in which Biopharma can transform patient outcomes through the ever-deepening integration of science and technology.
2024 promises to be another eventful year for Biopharma, given the upcoming IRA drug pricing negotiations, election-year dynamics, and uncertainty regarding the probability and timing of rate cuts. Despite these challenges, I believe the industry's strong fundamentals coupled with an improving macroeconomic climate will make the second half of this year a turning point for Biopharma – hopefully showing some signs of thawing after a long winter.
—Areesha Saif (Biopharma Expert)