Tech Disruption

Oscar Health has drawn strong funding support from private investors and will now look to garner similar support in public markets in an upcoming IPO.

The tech-minded health insurer secured $140 million in new funding in December 2020 and has raised about $1.6 billion from private sources, "making it one of the health insurance unicorns that raised the most from private sector," IPOX Schuster LLC analyst Kat Liu said in an email to S&P Global Market Intelligence.

"It's an ambitious offering for a healthcare company of its profile, but not for an up and coming technology company," Avalere Health LLC founder Dan Mendelson said in an email. He expects Americans to become increasingly willing to use telehealth and believes the Biden administration's bid to "expand the affordability and availability of insurance" will help Oscar Health.

Liu, who described the initial IPO price range as "quite reasonable," said Oscar Health picked a good time for its IPO plans given the "high valuation, market sentiment etc." She noted that Lemonade Inc. is up over 400% since its IPO on July 1, 2020.

Telehealth

Following a record-breaking 156% increase in worldwide visits to its platforms, Teladoc Health Inc. CEO Jason Gorevic said he remains confident that the company has plenty of opportunities to continue to grow membership.

During a Feb. 24 earnings call, Gorevic described 2020 as a "transformational year" for Teladoc, noting that the telehealth company onboarded 15 million new paying members. Fourth-quarter revenue was $383 million, an 145% increase year over year, and Gorevic said the company also saw organic growth of 79% when excluding the InTouch Health and Livongo acquisitions.

Investment

Following a year of social distancing, lockdowns and job losses, 41.1% of U.S. adults reported symptoms of anxiety disorder or depression in January 2021, according to the National Center for Health Statistics and the U.S. Census Bureau's Household Pulse Survey.

These growing concerns have opened up a path for digital health companies with mental health platforms to raise capital and expand their customer base by offering services for employers to utilize for their workforces.

Over the past two years, investors have channeled millions of dollars into platforms that offer mental health and behavioral care services. Following the onset of COVID-19, firms ramped up their investments, leading to Lyra Health Inc.'s $187 million series E funding round and Modern Life Inc.'s $74 million round in January 2021 — the same month that another mental health company, Talkspace Network LLC, announced it would merge with blank-check company Hudson Executive Investment Corp. to form a combined entity worth about $1.4 billion.

Pharma

Add greater antitrust scrutiny to the list of headwinds facing the pharmaceutical industry in 2021.

Under the administration of President Joe Biden, the U.S. Federal Trade Commission is rallying fellow regulators in Canada, the U.K. and Europe to revise the way they study the impact of pharmaceutical M&A. Antitrust reviews generally involve examining product and pipeline overlap, and FTC acting Chair Rebecca Kelly Slaughter envisions a more sophisticated approach that includes a transaction's effects on prices and access to medicines.

"Pharma is an area that depends so heavily on innovation and entry of new products often developed by small competitors," Slaughter told reporters on a March 16 call. "We need to make sure that we're not just thinking about the sort of traditional questions of market share, and instead, we're really looking at these questions about innovation and what's going to get new treatments and new drugs to market so that consumers have access to them and, importantly, have access to them at prices that they can afford."

Recognizing that several of the top pharmaceutical and biotechnology acquisitions since 2015 were cross-border deals, the FTC is joining forces with its international peers to "take an aggressive approach to tackling anticompetitive pharmaceutical mergers," Slaughter said in a March 16 FTC press release.

Research & Development

Messenger RNA vaccines have already scored early successes during the COVID-19 pandemic and Gilead Sciences Inc. has bet that this technology could be used to achieve another pharma first: a long sought-after HIV inoculation.

With mRNA vaccines from Pfizer Inc.-BioNTech SE and Moderna Inc. receiving emergency use authorization to fight COVID-19, Gilead Senior Vice President and Virology Therapeutic Area Head Diana Brainard said in an interview that the stage is set to use the technology in other areas that have long stymied researchers, including HIV inoculation.

Gilead, which specializes in HIV therapeutics and daily preventative medications, has yet to develop a vaccine. But an HIV inoculation, because of the way the virus affects the body, has long been in preclinical circles.

"One of the biggest challenges that we face in HIV care is that no one's done it yet — individual patients have been cured through bone marrow transplant, which isn't really a scalable approach," Brainard said. "We don't really have a roadmap for what 'good' looks like there, even though there are a lot of hypotheses and a lot of educated guesses to achieve a cure."

One of the difficulties in HIV vaccine development is the transition from studies in animals to humans because the viruses are not the same.

New Entrants

Retail behemoth Amazon.com Inc. continues to shake up the healthcare world by leaving one venture and launching a new one, leaving some industry CEOs determined to work with — not against — the disruptor.

Amazon's exit from the Haven joint venture announced Jan. 4 seemed to experts a way for the retailer to prioritize its much grander healthcare plans to revolutionize the delivery of drugs.

The Amazon Pharmacy platform — launched in November 2020 — is the company's effort to do so, allowing users to browse and purchase medications online and have them shipped to their homes. But Amazon's Haven exit also showed just how hard the healthcare industry is to disrupt in the first place.

Further Reading