Published January 31, 2022 | 5 min read
Key Points
- Patient backlogs, staffing shortages and other legacies of the pandemic will be difficult to mitigate.
- However, in the longer term, technological progress and innovative therapies will prove fundamental.
- Smart devices and robotics in surgery are key long-term trends, along with the virtual delivery of healthcare.
- In cell and gene therapy, maturing technologies will feed further innovation in the next few years.
- Data is core to applications and growing data wealth is one of the most under-appreciated value drivers.
At RBC Capital Markets Healthcare Private Company Conference, companies and key opinion leaders were optimistic about the long-term opportunities for the sector, but remained concerned about the secondary effects of the COVID-19 pandemic in 2022. Staffing shortages, growing patient backlogs and sicker patients who’ve had to wait longer for treatment are all part of these knock-on effects, and may take years to shift.
But these near to mid-term issues are set against a backdrop of innovation in therapeutics and technologies. Genetic and cell therapies continue to evolve as the technologies involved mature, leading to new approaches in treating cancers, heart disease and bleeding disorders. Virtual provision is set to revolutionize the delivery of healthcare, and smart implants will help with patient compliance, as well as early detection and diagnosis of complications.
Staffing shortages continue
Across the varied fields represented at our conference, staffing was a big theme in our key opinion leader (KOL) discussions. Our orthopaedic KOL said he couldn’t see an easy solution to staffing shortages until international borders open up again to allow more foreign nurses and other workers to enter the US.
Our cardiology device expert is also seeing capacity constraints in his specialty due to staffing shortages, and neither KOL expects things to ease soon.
At the same time, increased hospital restrictions and patients’ fear of COVID have resulted in fewer procedures being performed in the last two years. As a result, many patients experienced a slow progression of their disease, so when they do come in, it’s with higher co-morbidities and greater risk of mortality. This is more dangerous for patients and also causes a higher burden on hospital resources as patients need to stay longer.
The workforce is now a little less experienced than it was, as there has been a great deal of resignation and movement among staff. We're starting to see some quality naturally decrease slightly because of that inexperience and some of the increased morbidity and mortality of the patients being admitted.
A tech-enabled future
These issues, and the consequent reduction in volume for the sectors, will dominate the near-term, so technological advances such as smart implants will likely have little impact in the next 12 months. These medical devices have matured a lot in the past decade and can now be used to monitor patients and remind them of their drug regime. In the longer term, they offer the opportunity to gather unprecedented levels of data on patients, help patients keep their therapeutic regimes and offer the possibility of early detection and diagnosis of complications.
Data is critical and core to applications across effectively all digital health offerings and this is going to drive meaningful strategic value. Those that are already gathering data will have the edge, as this growing data wealth cannot be aggregated overnight. We think it is one of the most under-appreciated value drivers and is going to drive several areas of digital health. There will be significant barriers to entry for those that can’t access or apply data. But those who can will be able to validate digital health products through clinical and real world outcomes and drive product innovation well beyond what is likely envisioned today, such as product potential from data sources like continuous monitoring. There will also be the opportunity to drive predictive outcomes with the potential to address chronic disease before it fully develops and, on the drug development side, potentially revolutionize drug discovery and development.
Recon robotics is another long term trend that is likely to fully permeate surgery over the next decade. The next generation of surgeons will be trained with robotics and are likely to demand it, according to our orthopaedics expert. The integration of imaging, navigation and predictive systems with accurate cutting mechanisms will be the future of the vast majority of joint replacements, according to our orthopaedic expert. As the market expands, the cost of equipment will decrease, allowing for broader adoption of the technology.
Maturing gene therapy
Gene therapy is another area where the technology has begun to mature and our KOL expert in this field expects to see multiple biologics license applications this year.
Significantly improved technologies are entering the clinic and so, in the next several years, those are going to bear a lot of fruit for the field and we’re going to begin to see the third generation of gene therapies progressing through clinic and succeeding.
Next-gen vectors could also have a large impact in the next few years, as they may translate to better transgene integration into the liver, decreasing the risk of liver and systemic toxicity issues and potentially resulting in lower dosing. That would also help manufacturing, as lower doses would mean less drug product per person and lower cost-of-goods-sold, making gene therapy more viable for larger indications. Manufacturing remains a challenge in the field, as it’s struggling to scale up in many areas using current approaches.
Positive data powers CAR-T
In cell therapy, there are no near-term manufacturing or capacity hurdles expected to impede the growth of new autologous CAR-T therapies for lymphomas. At the same time, allogeneic CAR-T looks set to serve the 10 to 20% of patients not eligible for the treatment, although it requires further optimization to match the efficacy of auto-CAR-T, according to our KOL. She views CAR-T as a game-changer in higher grade lymphomas for unparalleled deep and durable response benefits.
Natural Killer (NK) cell therapies need to go a bit further to become competitive with CAR-T therapies, unless they are used at later lines than CAR-T. Clinical data is currently lacking on durability of response and persistence of cells and a 40 – 50% CR (complete response) rate could be needed if looking at NK as a CAR-T alternative.
Revolutionizing the delivery of healthcare
While innovation abounds in biotech and biopharma therapies, it’s also taken hold in how healthcare is delivered. Digital services were given an enormous boost during the pandemic, when they became more necessary. But now, they are addressing more specific needs in the sector.
Because of staffing shortages, for example, solutions that mitigate labor pressure are in high demand. Customer empowerment is also a top trend, as we continue to see healthcare costs rise and more of the financial onus is being shifted onto the patient. This is creating demand for solutions designed to help individuals manage their care via prevention and/or proactive management, as well as assist in navigation to the highest value care channels.
This empowerment is adding to the race to facilitate value-based care, a transition that has been going on for years. The ability to deliver, however, is heavily dependent on the quality and usability of data to inform care decisions and monitor longitudinal patient outcomes. This space is highly competitive, even if the proportion of care delivered on an at-risk basis remains relatively low.
While the difficulties in patient care across the sector may somewhat dampen the next 12 months, the underlying fundamentals of innovation and technological progress remain strong. We may find that company outlooks at our Healthcare Private Company Conference for 2022 are very different from the cautious view of 2021.
This content is based on sessions and analysis from RBC Capital Markets’ Healthcare Private Company Conference, which was held on December 15-16, 2021. For more information about the conference, please contact your RBC representative.
