At the intersection of the drug price debate and tax reform, B Capital Group Partner Gavin Teo sees technologies that can bring drugs to market faster as a significant area of investor interest this year. The Trump administration’s tax reforms, which were signed into law as part of the Tax Cuts and Jobs Act, will help make technology companies focused on the pharma value chain more attractive, Teo observed at Rock Health’s networking event during the J.P. Morgan Healthcare Conference this week.
“We are at the top of a profitability cycle,” Teo said. “It’s a bumper time for making money from drug development. And under the [current] administration we have a more liberal FDA.”
The Trump tax reform provisions offer some incentives for biopharma companies that add to the positive outlook, Teo noted. The repatriation tax and the lowered corporate tax rate are designed to incentivize corporations, including life science businesses, to return their corporate headquarters from Ireland and other offshore locations to the U.S. for tax optimization purposes.”
Teo drew attention to a couple of technology companies set on improving the pharma value chain. Science 37, which is interested in making clinical trials so flexible that participants could take part from the comfort of their homes, is one company active in this area. Another is Evidation Health, which is a B Capital Group portfolio company. Although Evidation has done clinical validation of digital health tools for health systems and payers, it has also expanded its services to include pharma customers.
A recent blog post by CEO Deborah Kilpatrick and Kristine Mullen, who serves as an adviser to Evidation, provided some insight into how the pharma component fits into the company’s approach:
The industry leaders of the digital era of medicine will be the healthcare stakeholders that provide value while empowering and understanding patients in their daily lives. Providers can deliver more individualized care by accounting for behavioral differences in patient management. Health plans can better understand population cost drivers both inside and outside clinic walls to target optimal outreach and time interventions. Pharma can more completely assess therapeutic response, find new ways to measure and influence adherence-related factors, and quantify outcomes for value-based discussions with payers and PBMs.
Teo noted that the investment arms of pharma companies such as Sanofi, Merck, and GSK are among the most active investors in tech solutions to shorten the drug development cycle, including in the earlier stages of research and development. For example, some solutions have focused on using machine learning for in silico drug development to optimize the selection of suitable drug targets and to predict a potential drug’s toxicity or side effects. But other companies active in the technology side of drug development R&D are automating clinical documentation tools and seeking to simplify clinical trial recruitment and participation.
Clinical trial recruitment is frequently cited as the most time-consuming part of clinical trials and the most common reason for their delay. Theoretically, if greater investor interest in the pharma value chain shortens the drug development process, savings will be passed on to patients.