J.P. Morgan Healthcare Conference: Predictions for 2024

Written by Julius Hugelshofer , Senior Principal (Healthcare) at Verlinvest

Last month, I attended J.P. Morgan ’s Healthcare Conference in San Francisco, which hosts 10,000 of the world’s top movers and shakers in #healthcare. I spoke with founders, practitioners, researchers, and policymakers about Verlinvest’s thesis on patient-centric healthcare, and had a few key takeaways when it comes to market insights and trends to watch:

1. The worst is behind us for healthcare markets – we’ve avoided a “hard landing”, and investors are still doing deals, albeit focusing more on strong business fundamentals than ever before. The mood was ‘cautiously optimistic’ compared to other events in the past two years, with capital raises completing, strategics investing in R&D once again and investors growing their healthcare teams to improve coverage. There’s plenty of pent-up demand for private equity to deploy capital in healthcare given huge market opportunities in such a large and fragmented space where we’ll see further consolidation (e.g. in aesthetics where the >$9bn US market is only 8% consolidated so far – you can read more about Verlinvest’s recent investment in Faceland Clinic here. Unlike pre-2021’s “spray & pray” approach, 2024 will likely see more proprietary, selective/thesis driven deals with thorough due diligence processes to ensure good fundamentals. A string of add-on acquisitions by large PE-backed players already active in a sector (e.g. dental) are a sign of that.  
2. Weight-loss drugs are the talk of the town but their effects on the healthcare market will be different than expected. The excitement around GLP-1 diabetes and weight-loss drugs such as Ozempic, Wegovy or Mounjaro has not dulled, but with >$1,500 of average treatment costs per patient and facing severe supply constraints, the treatment will not reach the masses any time soon. Its impact on broader healthcare, however, has already been pervasive in other ways: It’s changing how payors and employers view reimbursement of chronic diseases such as obesity (whose cost to society is expected to surpass $4 trillion in the next decade) and its numerous co-morbidities such as cardiovascular disease. It was previously seen as being too costly or insignificant, but prevention is now being embraced to a greater extent. Obesity is starting to be seen by the mainstream medical community not as a pure lifestyle disease, but as a metabolic one that needs medical treatment. This change in mindset can be critical for how other chronic diseases are perceived, e.g. mental health or female health (another hot topic of the conference) Verlinvest has backed this trend through our investment in Sinomedica , which uses acupuncture to treat obesity. Lastly, and perhaps most idealistically, GLP-1 may change the cost-benefit analysis of big pharmaceutical companies when assessing the opportunity of tackling chronic/common diseases through ever-more-costly clinical trials. The case study of Novo Nordisk ’s 5x share price increase in the last 5 years, making it Europe’s most valuable company, will surely convince more Boards to back R&D spend in fields such as female health, rather than solely focus on rare diseases.
3. Sky high healthcare costs will continue to drive patients to private alternatives, as well as increasing digitization. Growing ageing populations will continue to overburden healthcare systems as the average >65 year-old costs the system nearly 3x more, making digitalization a necessity for cost savings rather than a nice-to-have. Indeed, many of the EU government-sponsored digitalization programs in Healthcare (e.g. in Germany & France) that were decided during Covid will drive reforms in healthcare over the next few years. But in the meantime, both digitalization and the use of AI in healthcare remain in their early days if not infancy for the latter. This means that we will continue to see better-funded private providers gain market share, coupled with a higher patient willingness to pay out of pocket for access to more efficient services.

I’m excited to continue following these trends and to find companies revolutionizing the sector. Please reach out If you’d like to connect! #healthcare #innovation #digital #futureofhealthcare