#RBCHealthcare2020: key takeaways from our virtual global healthcare conference

Published June 25, 2020 | 4 min read

A record number of 1,200 participants – including 714 investors and nearly 300 presenting companies – gathered at this year’s #RBCHealthcare2020 conference, held virtually under the shadow of the COVID-19 pandemic. Healthcare is rapidly changing in this environment, but what will the ‘new normal’ look like?

There is no aspect of life today that has not been overshadowed by the COVID-19 pandemic. But for the healthcare industry, it has brought particular challenges and opportunities for new direction and growth. At #RBCHealthcare2020, the story that is growing out of this crisis is one of accelerating change in the industry and hope for the future that a vaccine, treatments and policies to control the pandemic are within our grasp.

Charting the uncharted

In a fascinating glimpse into the public health crisis, former US Food and Drug Administration (FDA) commissioner Dr. Scott Gottlieb was joined by  RBC Capital Markets’ Dr. Brian Abrahams and Dr. Kennen MacKay, Co-Heads of Biotechnology Research, and Randall Stanicky, Managing Director of Specialty and Generic Pharmaceuticals Research. Their wide-ranging insights included discussions around potential vaccines and treatments for COVID-19 and a variety of challenges and outcomes for potential second wave scenarios.

In the wider industry, it may seem as though sectors stand to benefit from the crisis as a key component in tackling the pandemic. However, the almost total halt of non-emergent care and the inability to conduct face-to-face treatments from dental work to orthopaedic surgery has had negative impacts all across the industry.

 

Measuring the impact

Despite the diversity of investors and clients at this year’s conference, shared challenges emerged. Generally, companies are seeing slowed new project team starts during Q2, though many are now starting to prepare phased, regional redeployment of field teams, perhaps optimistically expecting a return to normal demand growth by year-end. There is a sense that rare disease, HIV, and entrenched cancer drugs have been best positioned to weather the environment, while launches into crowded spaces appear more challenging.

Though no severe impacts have yet materialized, COVID-19 continues to slow down clinical trial enrollment – particularly when administration or monitoring is complex. For studies that were farther along early this year, companies appear to have found ways to complete recruitment using sites outside of the US. However, few have clear visibility on timelines for new trial starts or resumption of paused studies as the pandemic continues to evolve.

 

Healthcare in the cloud

At his keynote on Day 2 of the conference, Dr. Gregory J Moore, MD, PhD, Corporate Vice President, Microsoft Health, made it clear that the recent announcement of Microsoft Cloud for Healthcare was brought forward to support the fight against COVID-19. This is the first industry-specific cloud solution from Microsoft and brings together capabilities from 365, Azure and Dynamics.

According to Moore, Microsoft is investing in Healthcare not as a disruptor, but as a partner to empower innovation. For that reason, the company is starting out by creating a partnering ecosystem, joining forces with incumbent healthcare systems and firms that already have patient trust.

“We are not a healthcare life sciences company at Microsoft. We are a technology company with core competency in cloud, in AI, in compute and insights and analytics. To actually have the impact we desire requires deep partnerships with companies like Walgreens Boots Alliance, Novartis and Humana,” says Moore.

COVID-19 has acted as an accelerant to Microsoft’s healthcare ambitions given the combination of rapid change and the need for rapid responses. In terms of patient care, the company is aiming high. “Success for me is that Microsoft is a key part of the ecosystem with partners delivering the core technology to further health and healthcare for individuals across the planet – billions of lives touched by a partnership technology solution.”

Clearly, healthcare could have a big impact on Microsoft, serving as both a meaningful growth vector and test run of a much more defined verticalization strategy. While still very conscious of the huge opportunity that the $7-trillion-a-year healthcare industry represents, Moore says Microsoft will retain its disciplined approach to M&A, but there are exciting conversations happening on corporate development.

 

M&A in flux

Microsoft isn’t the only firm thinking about M&A, even in these uncertain times. While companies may have been standing still in the initial weeks, Henry Minello, Principal in the Global Healthcare Group of Permira, believes now is the time for companies with worldwide reach to go on the offensive.

“We have capital to invest and the flexibility to be selective across different geographies. Having ‘go anywhere’ geographically speaking funds is incredibly valuable in a climate like this where you see changes happening pretty rapidly.” he says.

However, there are complexities in the market to overcome. Practically, it’s hard to do a deal when you can’t meet in real life to discuss the details. Many firms will be sticking with areas and businesses where they already have experience. At the same time, there is regulatory concern, potentially politicized, that allowing deals to go ahead would harm the market.

“Some of the concerns are that we could see assets getting picked up at too low prices, or we could be giving stimulus to companies that might be engaging in predatory behavior,” says Steve Sunshine, Head of Skadden's Global Antitrust and Competition Group. “But these are all things that are illegal under the current law.”

For the future, companies need to consider the coming recession and the potential lack of financing for new deals. They will also need to be wary of other companies and countries reassessing their supply chains in the wake of the crisis, which may put a dampener on appetite for cross-border deals.

“Companies will continue to pursue their strategic imperatives across borders, but there will be a lot more thought put into exactly how you execute and what kinds of political concessions you might need to make in order to bolster support for a deal,” says RBC’s Larry Grafstein, Deputy Chairman of Global Investment Banking.

COVID-19CloudDigital HealthDrug DevelopmentHealthcareHealthcare M&ATechnology