Bolder biotech investments, not less, is key to better health outcomes for all

HEALTHCARE costs are rising globally. This is driven by ageing populations, lifestyle demographic shifts, newer treatments being offered, and a skilled manpower shortage.

Since the Covid-19 pandemic, inflationary pressures have been experienced across the healthcare industry. The WTW Global Medical Trends Survey projects more than 10 per cent increase in medical costs in 2025.

Yet, evidence of an association between healthcare costs and quality outcomes is inconsistent.

Regulators and policymakers, meanwhile, continue to take significant steps to contain such healthcare costs. These have ranged from attempts to reform the insurance payment system, expanding care upstream to focus on prevention and early detection, health technology assessment to determine cost-effectiveness of therapies, and expanding the pool of healthcare manpower.

These measures are multi-pronged and will take time to see their effects.

Today, process improvements are further augmented by investments made in innovation. Sentiments for biotechnology investments are improving, with more venture funding into the space. Large pharmaceutical companies have clear mandates and resources allocated for cutting-edge research and development into technologies such as CRISPR, AI, and biologics. Furthermore, there have been multiple successful funding rounds to attract capital towards advancing life science research in universities and research institutes.

Such healthcare-focused biotech investments into companies are seen across all areas of the clinical development stages from bench to bedside and is enhanced by optimistic projected M&A activity levels in 2025, which extends the momentum of deals such as Novo Holding’s acquisition of Catalent.

The valuable aspect of such investments is that the innovation areas will be in diseases and conditions which were previously considered intractable. Whether it be in cell therapies or cancer research, biotech companies are researching and developing with an eye on their commercialisation strategy. Such expansive market size is estimated to have a multiplier effect by ensuring that patients benefit from better quality of life in the long run.

The healthcare services industry as a whole, too, is undergoing significant transformation. Hospitals and clinics today are rethinking models of care which were previously less amenable prior to the Covid-19 pandemic. These include home care, telemonitoring, and digital health which create a milieu for technology to be leveraged further.

Better health outcomes can be driven by continued investment activity in the space. And biotechnology innovation will serve to augment the new platforms in which doctors are treating the patients of tomorrow.

Not all biotech advancements are about creating even more expensive drugs with marginal benefits. In fact, a lot of such innovation is about expanding access to drugs, expanding the types of patients that can benefit from life-saving treatment, and building a competitive landscape that drives the costs of drug therapy lower.

The key is not to view biotech innovation in isolation. South African biotech company Afrigen is collaborating with scientists to develop gene therapy for diseases affecting the African continent. This technology will not just have benefits for millions in the continent, but may also be translatable to other conditions that plague richer communities.

Furthermore, investments that appreciate health inequities create a collaborative environment for knowledge exchange and take advantage of motivation in achieving global goals. The Bill & Melinda Gates Foundation has worked with China in developing the Global Health Drug Discovery Institute that looks for treatment to conditions that affect low-and-middle-income countries disproportionately and brings affordable products to those who need them.

Essentially, investments in biotech are about building the depth of knowledge and research that can be called upon during periods of international public health crises.

Major pharmaceutical companies have long argued that outsized price tags for medications are to account for the research and development needs amid a competitive patent environment; and that profit incentive is necessary to drive innovation. However, latest research has suggested that smaller biotech companies have disproportionately driven the number of new drugs approved in recent years.

What this indicates is that investments need to be channelled into the right – not necessarily largest – players, and capital should impose strict thesis-driven mandates that take into consideration long term health equity goals and advancement. This demands of investors to not be blindsided by just healthy balance sheets, but to keep an eye for ideas that can thrive in the new healthcare landscape.

Policymakers will need to find a balance between creating a sufficiently competitive environment that encourages innovation, coupled with a clear strategic direction that biotech companies are able to tap upon to ensure that their products are accessed, sold, and manufactured in a cost-effective manner.

Communities and patients will benefit from affordable healthcare. And bolder investments made towards biotech innovation will ensure that better drugs continue to be created sustainably.

The writer, a medical doctor by training, advises on macro strategy for a long-only global all-sector innovation fund