March 3, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Health is the new asset class and as such the medical industry and public policy must shift to reflect the idea that health is not a cost you insure but an asset you own, a former Congressional health adviser and current biotech investor told an audience of life sciences experts in San Francisco on Tuesday.
The morning keynote, “Democratizing Investment in Health Care,” was given by Greg Simon, chief executive officer of Poliwogg Healthcare Investments, at CALBIO2015. With over 100 California life science companies and investors in attendance, the conference has become a favorite for discussions involving opportunities and scale in the rapidly innovating world of science.
“Let’s consider health not as a cost you insure, but as an asset you own,” said Simon as he began his speech. “The cost of health is never as big as the cost of disease.”
Most recently Simon was senior vice president for Patient Engagement at Pfizer Inc. where he focused on engaging patients more productively in research and clinical trials and on helping Pfizer develop policies, practices and medical solutions to improve health, happiness and productivity. Now, as a healthcare investor, he said he is in a unique position to think of health as just another commodity—albeit he most important one there is in life.
“The national conversation about health has been obsessed with costs. Forty years ago we had the same obsession with the cost of oil,” said organizers. “Through investments–not charity–oil went from a cost to an asset owned by millions of people with the result that we now have a surplus of oil and the price is near all-time lows. With oil now a surplus commodity, billions of dollars previously invested there will be looking for the next big thing–and health is it.”
Still, for all that hype, Simon told the audience Tuesday that biotech remains a sometime opaque market, with plenty of opportunity but not always a lot of clarity for investors looking to find value.
“The biotech industry is not organized to let investors invest,” said Simon. “Your disease is not a small-cap disease."He compared it to other industries where capital begins flowing into new ventures almost immediately, and said there must be new processes in place to help health function as its own unique asset class.
“Unlike software with a lot of money at beginning, biotech has small amount at start,” said Simon. “We need to fix the beginning.”
“Financial tools used for decades elsewhere are now being deployed in health, providing new ways for individuals and institutions to own health as an asset,” said organizers. “As the Boomers enter retirement, millions of Millennials are turning 35 and entering the stock market aided by social media and online investing. Already the best performing market sector for the last 10 years, biotech and the life sciences are poised for growth.”
As part of that push for a unified, transparent marketplace, Simon said Poliwogg is creating indices to help insurance companies find the best way to “price health”. It is also Poliwogg creating public venture funds that anyone can invest in, dividing funds into disease group, with stem cells/Reg Med the first fund.
“We need a futures market in biotech,” said Simon. “Moore’s law has hit biotech.”
Simon said as a result, Poliwogg has looked at 300 companies in the last year, but realized they can probably only help 15 to 20 of them, with a price range $2 million to $10 million.
“Therapies are hot,” he said. “We are getting daily breakthroughs on devices, drugs and apps. The opportunity is there.”
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Last week controversy erupted over the compensation package for Sanofi’s new CEO, Olivier Brandicourt, with several French government officials decrying the amount, calling it “incomprehensible.” Brandicourt could walk off with as much as $4.5 million in a “golden handshake” payment in addition to making $4.76 million a year. That base figure is comprised by a fixed annual salary of $1.36 million a year, which is supplemented by a performance-related bonus of between 150 to 250 percent, as well as stock options and performance shares.
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