David Hawks, Hydrix’s new Senior Vice President of Business Development and Strategy, shares his insights and observations on the status of MedTech funding and innovation, more than a year on from COVID-19
A cautiously optimistic market emerges from COVID-19
With so many unknowns, healthcare investors and organizations were predicting pretty dire outcomes 12 months ago. And while there has been an undeniable downturn, it hasn’t been as severe as initially expected, especially for companies with diverse portfolios that helped offset some of the impact from deferred ‘elective’ procedures.
Several forces have coalesced to create an overall attitude of “cautious optimism” at the start of 2021. Firstly, the healthcare system responded courageously to the public healthcare emergency by increasing access to remote care via telehealth and digital health. In addition, reimbursement by payors has provided critical support for patients and providers. Both factors have contributed to good care and cost outcomes.
Secondly, aggressive COVID-19 diagnostics and therapeutics development, fast-tracked support (especially in the United States) and emergency use authorizations (EUAs) for diagnostics and vaccines, have created a backdrop for supporting the return of elective surgeries without completely sacrificing the FDA process. This has been achieved by completing the steps required for product development and regulatory authorization in parallel paths, at risk, rather than in sequence. These circumstances mean patients are now becoming more comfortable about going into a facility to get an elective procedure done. With a ramped shift to Ambulatory Surgical Centers (ASC’s), added capacity is also freed up for more elective procedures to happen.
Furthermore, even during COVID, investment was up substantially. In 2020, there was a record year-over-year increase in US venture capital funding and we saw a very strong IPO market. There's a lot of funding available for companies, especially those at mid to later stage, to execute on their development plans and product pipelines. This means many are now increasingly focusing on ways to innovate as they seek to become more active and visible in the marketplace, rather than just trying to address urgent issues or maintain the status quo.
The COVID-19 pandemic has sped up trends already underway, leading to increased agility, innovation, and drive towards long-term value. And while VC funding isn’t quite as strong in 2021, it’s still significantly up on previous years. Provided companies continue to see a lift in procedural demand and promising results for early 2021, this will drive a strong outlook for the second half of this year and ideally beyond, IPOs and large ticket M&A will likely accelerate. The emergence of healthcare-focused special purpose acquisition companies (SPACs) also potentially offer a streamlined path for companies to go public.
A COVID-fueled explosion in digital health and remote monitoring
Accelerated innovation and uptake of digital health technologies had already started, but the pandemic has compressed what is normally a three-to-five-year process into one. Telehealth visits, for example, have become normalised, especially since the Center for Medicare Services decided to reimburse them at the same rate as in-person consults.
Moving forward, healthcare providers will use telemedicine more routinely, with benefits for both clinicians and patients. In-person visits will still be there for situations where you need to be hands-on as a clinician, but the ability to do things digitally, like a tele-visit, is going to be part of how you interact with the healthcare system. Instead of having to get in the car, go to an appointment and wait in the waiting room, a tele-visit is more efficient. That will free up availability for clinicians to see those patients who really need to see someone in person.
These technologies allow for a more patient-centered model of care and provision of significantly richer data than the snapshot provided during a single consult. For example, patients are being given pulse oximeters with the ability to communicate via a network back to the provider.
Some of these technologies are clinically validated and FDA approved, so they're supplying legitimate clinical information to help the patient and their providers understand how they're doing medically. Others are more lifestyle-related, looking at things like whether you’re exercising, eating right and getting good sleep. These biometrics provide a more holistic picture of the patient that can be shared with clinicians and help them support patients to live a better life.
Digital technologies also facilitate provision of care independent of location. Care is going to be delivered in a variety of places, not just a facility. It's going to be where you are. Furthermore, monitoring technologies can help address the emergent needs of an ageing population. For instance, say you have an elderly parent. Monitoring technology can be used to track their activities in the home. Then, if something is out of the ordinary, it might alert a child of that person or the healthcare provider, or both.
Clinical trials, which suffered at the start of COVID, have also benefited from wearable devices and digital communication platforms. You can do a clinical trial for a device or a therapeutic in a much faster fashion now. Many companies are shifting to digitally enabled clinical trials and you're going to see a lot more of that happening. It gives you the ability to get a much bigger group in your clinical trial with a variety of backgrounds, which is really important for making sure the diagnostic or therapeutic works for all different populations.
Global trends driving the cardiovascular sector
Technologies are also rising to the forefront in the cardiovascular space, a market where Hydrix is particularly active. A key driver for this is the global population ageing trend. Cardiovascular disease is one of the most prevalent disease states in the world. Part of the reason for that is globally we're getting older. Your lifestyle and family history may mean you have more of a predisposition for cardiovascular disease, but age is a definite factor.
Another important trend is the move to less invasive and less patient-impactful technologies, so you’re continually seeing investment and spending on that. Transcatheter valve technologies, for instance, are much less invasive to the patient. You can perform that procedure on a much older patient and have fantastic outcomes.
Recent approvals for use in younger patients are also a catalyst. They can be back to activity within a very short period whereas before it would take months for you to heal and be able to move around readily.
When it comes to ventricular assist devices, in some cases using them in conjunction with transcatheter valve procedures is leading to better patient outcomes and allowing patients to get back to their activities of daily living much faster. Ventricular assist devices are also being used to provide cardiovascular support as a ‘bridge to transplant’ while patients await a donor heart, a ‘bridge to recovery’ following an acute cardiac event, and as a destination therapy to support longevity in patients for whom other procedures aren’t suitable.
The race to make these devices smaller, better, and faster continues. It's really important for patients because something smaller has less impact, requires less invasive surgery and less healing, so patients are back to their normal activities faster.
A positive outlook for 2021
Market sentiment in the healthcare innovation and investment sector is quietly positive and companies are now starting to think more about areas of concern that existed before COVID. The medical community has absorbed an immense demand taking care of COVID and the innovation that has come out of it has been tremendous. But now, the emphasis and resources are shifting back to how can we help patients live better lives.
David Hawks is Senior Vice President, Business Development and Strategy.
Based in Minneapolis, David’s experience spans technology solutions in software, communications and networking, investment banking, and more than 15 years in the life sciences sector.
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