Health executives see tech firms like Alphabet remaking industry

  • TECH
  • Wednesday, 17 May 2017

Health application touchscreen interface for improving fitness through personal healthcare

Healthcare executives expect counterparts at tech companies like Alphabet Inc, Google’s parent company, to transform their industry over three to five years, according to a Lazard Ltd survey. 

“We’re seeing significant pricing pressure in the industry, and the response to that pricing pressure will be innovation,” David Gluckman, co-head of Lazard’s global healthcare group, said by phone. “It’s not only scientific and technological innovation, but maybe even more importantly, new business models.”

More than 80% of respondents in the US and Europe said non-traditional competitors including Apple Inc and Fitbit Inc will have an impact on the industry, Lazard said May 15 in releasing its survey. About a quarter said the change will be “transformative” within three to five years.

Alphabet has set out to invest in healthcare and biotechnology ventures, while joining with companies like GlaxoSmithKline Plc, the UK’s biggest drugmaker, to use science to help treat diseases. Survey respondents said the most transformative change will be a shift to value-based pricing, in which some money may be refunded to insurers if a drug doesn’t work as expected. 

“There has been some question about whether the shift to value-based payment would continue in the US after President Trump’s election,” Lazard said in the survey. “The survey suggests strongly that it will.” 

Gluckman, a physician, founded and operated an outpatient medical clinic in Toronto before joining Lazard in 1998. The Bermuda-based investment bank hired Peter Orszag from Citigroup Inc last year to boost the healthcare business. Lazard advised Johnson & Johnson on its US$30bil (RM129.57bil) agreement in January to buy Actelion Ltd. It worked with insurer Aetna Inc. on an attempt to combine with rival Humana Inc, a deal that unravelled amid antitrust concerns. 

Lazard said it surveyed 213 C-suite personnel and 87 investors globally from Sept 9 through Dec 20, in pharmaceuticals and biotech; medical devices, technology and diagnostics; and health services. C-suite included “CEOs, CFOs, and senior executives involved in strategic decision-making,” the investment bank said. — Bloomberg

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