Dr. Gur Roshwalb, a former medical practitioner and now managing director at aMoon, a health technology and life sciences venture fund, discusses how Covid-19 is changing biotech investing, what he looks for as an investor and which new sectors are gaining momentum.
Global Finance: How do costs drive the current healthcare revolution?
Gur Roshwalb: The world spends more on health care due to, among other factors, longer life expectancy. The US alone spends about 17% of GDP on healthcare, which is an unsustainable rate. But, on the other hand, dramatic innovation leads to a significant decline in certain costs. For example, in 2001 it cost about $1 million to get the sequence of the human genome, while today it is about $1,000. That leads to new areas of biotech, such as genomics and proteomics [the large-scale study of proteins and their performance], which can lead to an early diagnosis and cure of many diseases.
GF: What are the trends spurring biotech interest and investing, besides Covid-19?
Roshwalb: The intersection of new technologies—such as AI [artificial intelligence] and big-data analysis—with healthcare developments creates accelerated new market opportunities. AI diagnosis takes the bias from doctors’ analysis. It will make sure that the right patients will get screened first, expedite the diagnosis process and solve the shortage of doctors. Yet, the human element will still be required in order to assess and treat the patient.
We focus on the convergence between tech and health. Generic medicine will become more personalized as a result of new technologies that help to better predict and cure, such as moving from general colonoscopy to personalized liquid biopsy and blood tests. In addition, we move from hospital care to community and home care, decentralizing healthcare. Also, the mobile revolution changes healthcare; as a mobile device can be used directly for diagnosis, such as in radiology.
GF: Where is the geographic center of funding and research?
Roshwalb: Most of the innovation happens in a few centers, such as Boston, the Bay Area, Israel, Switzerland and New York. Yet the biggest challenge for biotech firms is to raise funding between seed-stage and late-stage phases, and funding is unequal in these centers.
Interestingly, China is becoming a growing innovative player in this space. Emerging markets, such as Brazil, are left behind. Investors look suspiciously at innovation coming out of new centers of biotech R&D, and at supply chains that are dependent on production in those locations.
GF: Will Covid-19 change the balance between public and private funding?
Roshwalb: Not significantly. In the US, many developments come from the National Institute of Health and its funding programs. Europe and Israel follow the trend. This innovation, funded by taxpayers, comes back to the public via the curing of patients. On the private side, big pharma companies in general prefer to acquire successful biotech companies rather than innovate themselves.
GF: What are common pitfalls in healthcare investing?
Roshwalb: Covid-19 dramatically accelerated telemedicine, and thus many investors are now rushing to this area. Yet this trend will slow down post-pandemic. Patients will go back to old habits. Also, doctors are incentivized to meet patients live in person.
Other trends, such as the use of mRNA, the technology behind the new Covid-19 vaccines, will last and lead to other solutions, such as cancer vaccines.