Recent years have seen monumental developments across the healthcare landscape. New technology is rapidly changing the way we treat and study disease. Changes in dietary trends and other lifestyle factors can cause spikes in some diseases and conditions while sending others the way of the dodo. With changing trends in health and sickness come changing investment trends in medical research. Financial authorities such as the Wall Street Journal and George Zavoico of JonesTrading Institutional Services have discussed some of the areas in healthcare that have proved the most tantalizing to investors today. Here’s a look at three of them.
In just the first half of 2015, venture capital investment in therapies for neurological diseases surpassed $1 billion and nearly matched the amount invested in the entirety of the previous year1. This demonstrates an attractiveness for investment that can be attributed to several factors, perhaps the most obvious of which is market size. One may be surprised to learn that stroke and Alzheimer’s disease were among the top five most dangerous medical conditions in the United States as of 20142. And the rates of some neurological conditions are on the rise. As the Baby Boom generation ages, a significantly higher portion of the population will enter the age range of highest risk for Alzheimer’s; in 2014, the World Health Organization predicted a significant increase in the global prevalence of depression by 20203.
This investment trend may be motivated not just by an anticipated opportunity in the future, but also by dissatisfaction with the past. George Zavoico argues that sub-par results from traditional treatments for neurological conditions have triggered the development of new methods, creating interest in investing in new frontiers of neurological research4.
No surge in investment into any kind of cancer-related research is likely to come as a surprise. Cancer is the second leading cause of death in the United States2; it has eluded efforts to find a cure even as the medical community makes great strides against it, creating a momentum and motivation that is perhaps without parallel in healthcare. Immuno-oncology represents one of today’s greatest advancements in cancer research. In using a patient’s own immune system to treat their disease, this technology can relieve some of cancer treatment’s dependence on chemotherapy, which causes great discomfort and can even be dangerous.
The level of investment in immuno-oncology reflects this potential: well over a billion dollars of venture capital has been invested in the technology since 20141. It will be exciting to see how much is invested in it by the end of this year.
In 2014, $863 million was invested into treatments for endocrine conditions, and by halfway through the following year, that number had nearly been matched1. Perhaps one can attribute the interest in endocrine conditions to the breadth of the category, which includes such disparate diseases as diabetes and certain cancers, among many others. And with sugary diets highly prevalent across much of the United States, as well as the fact that cancer always presents opportunities for research and treatment, it’s perhaps no wonder endocrine conditions have caught the eye of the investor community.
Beyond drug development
These rapidly growing markets have spread across the healthcare landscape, opening doors in adjacent industries. As of last November, there were 450 open immunotherapy studies on ClinicalTrials.gov; many of these were Phase I trials5, suggesting recent initiation. The same is true for Alzheimer’s and Parkinson’s. Such robust clinical trial activity presents opportunities to industries such as EDC, which can help catalyze the clinical process so new treatments can get to market even faster. As medical advancements in these fields and others continue to improve the health outcomes of patients everywhere, we may begin to see that their economic potential is equally far-reaching.
1 Gormley, Brian; 5 Trends in Health Care Venture Investment in 2015; The Wall Street Journal; 12 August 2015
2 Centers for Disease Control and Prevention; cdc.gov
3 Luhrmann, T.M.; Is the World More Depressed?; The New York Times; 24 March 2014
4 Mack, George; How Three Companies Have Been Resurrected from Failed Clinical Trials: George Zavoico of JonesTrading; Investorideas.com; 6 April 2016
5 Golgher, Denise; Pinho, Roberto Rodrigues; The Business of Immuno-Oncology: Big Innovation and Big Deals Characterize the Era of Immunotherapeutics; 1 February 2016