Recent reports are showing an increased interest in life science investments. MIT Technology Review reported that venture capital investment in U.S. life sciences startups rose to $8.6 billion, a 29 percent increase from 2013 to 2014. CB Insights reports that biotech and pharmaceutical investments reached $4.66 billion in the first nine months of 2014, with digital health and medical devices also showing significant gains. California had the majority of life science investments in the nation, but Pennsylvania is showing promise as an emerging hub, accounting for 5 percent of deals.
The most recent numbers suggest that investors are interested in the healthcare and life sciences industry, but will that interest continue? In this blog, we analyze some of the top drivers of life science innovation and how they will affect the investment landscape in the future.
Increased Focus On Patient Engagement
With policy changes, new technologies and cultural shifts, patients are taking a more active role in their health management than ever before. Furthermore, as more patients gain access to their electronic health records (EHRs), engagement is more likely to happen. In the Wall Street Journal, Lygeia Ricciardi, director of the Office of Consumer eHealth, stated that by using EHRs, “patients better understand their own condition and have more informed conversations with doctors.”
Historically, patients would ultimately leave their health management and care decisions up to their physicians. Now, as these digital health tools become more available, patients are more interested in being active participants in their care. Studies show that patients worldwide and from all age groups want access to digital health services that meet their needs and are high-quality. The problem is that many of those services don’t exist yet, according to a study by McKinsey & Company. This is why investors are showing interest and why more health startups are popping up━to fill the need.
Convergence of Healthcare and Big Data
Traditionally, the healthcare and life sciences industries have lagged far behind other industries like retail and marketing when it comes to embracing actionable, big data and using it to make meaningful changes. However, in recent years, strides have been made to catch up to these other industries.
Advances in big data and technology have made it easier for physicians, researchers and other leaders in the life sciences and healthcare industries to collect valuable and actionable patient insights. For example, the National Institutes of Health (NIH) launched the Big Data to Knowledge (BD2K) initiative in 2012 to promote better access to and quality of health and disease information in the biomedical research community. The sharing of this data could help to accelerate and increase the effectiveness of new drugs and treatments.
Even hospitals are starting to embrace big data. The Harvard Business Review says some hospitals are using, “graph analytics to evaluate the relationship across many complex variables such as laboratory results, nursing notes, patient family history, diagnoses, medications, and patient surveys to identify patients who may be at risk of an adverse outcome.”
This convergence of big data and healthcare is inspiring new innovations and laying the groundwork for emerging startups to enter the space.
Some investors and industry thought leaders have expressed concern over whether or not the investment and innovation in life sciences will continue. This is especially prevalent when considering the biotech investment boom, with some calling it a bubble that could potentially burst in the next few years. There are definitely obstacles that healthcare and life sciences startups must address and overcome to be successful in a market that is in a period of transformation. However, recent reports suggest that the overall outlook for investments is optimistic. Companies that have an innovative, in-demand product, smart marketing, a business plan that foresees and plans for the future are likely to come out on top.