Health Executives See Tech Firms Remaking Industry

Health Executives See Tech Firms Remaking Industry
Fotolia

Health-care executives expect counterparts at tech companies like Alphabet to transform their industry over three to five years, according to Bloomberg, citing a Lazard 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 health care group, said by phone. “It’s not only scientific and technological innovation, but maybe even more importantly, new business models.“

More than 80 percent of respondents in the U.S. and Europe said nontraditional competitors including Apple and Fitbit will have an impact on the industry, Lazard said 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 health care and biotechnology ventures, while joining with companies like GlaxoSmithKline, the U.K.’s biggest drugmaker, to use science to help treat diseases. Survey responders 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 U.S. 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 last year to boost the health care business. Lazard advised Johnson & Johnson on its $30 billion agreement in January to buy Actelion. It worked with insurer Aetna on an attempt to combine with rival Humana, a deal that unraveled 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.