How has the fund changed Merck & Co, and, particularly given the length of time you have been there, what changes have you found rewarding?
Not a lot has change with the fund since we started in 2010. The subtle change to the fund is around our strategy. When we first launched, the goal was to provide Merck optionality around M&A as they looked to enter new businesses. Though this remit is still there, we have begun to focus the portfolio and investing in companies that have a more direct and immediate impact on our core business. If they can be standalone and provide optionality or revenue, then that is an added bonus. One of the rewards of this change, as Merck has focused on oncology, is that we have done a number of investments in this space which have real impact on patient’s lives and the health ecosystem.
How does a venture unit in pharma and health handle the risk, not just that of a small company, but of a technology or innovation that may not deliver, particularly given the heightened regulatory environment?
Regulatory requirements tend to increase costs and risk greatly for early-stage companies and their technologies. A convenient answer for many firms is to invest only in non-regulated healthcare businesses. While there are certainly opportunities to make money in consumer-focused businesses, it may be a smaller market than many think. The US Food and Drug Administration (FDA) exists to protect the public. Consumers will certainly have an important role in healthcare. But recent FDA actions show the fuzzy line that separates consumer use from medical use is squarely in their sights. The stance on 23andMe, recent guidance on mobile apps, and actions against clinical decision software providers all point to an evolving regulatory position that broadly wants to ensure data is not used in ways that harm patients.
If companies and investors do not understand the regulatory risk, then both the company and its technologies will ultimately fail. We have to understand that risk as we invest.
In respect of e-health solutions and digital health more broadly, what excites you, what are the trends, and what are some of the potential limitations?
With a vision that data will be the currency in healthcare, Merck GHI invests broadly in digital health with specific focus in personalised big data and technology-enabled care. With that as a backdrop, we are excited about a number of areas. First, we think body-sensor monitoring and monitoring in general is really the first wave of the future of healthcare. In big data, we still believe aggregation, integration and analytics will be big factors, especially with advances in artificial intelligence (AI), machine learning, natural language processing and blockchain. We are now just understanding the impact of these technologies on healthcare.
Limitations are always hovering around technologies. Ultimately, it is about the data and can these technologies produce outcomes. It is not just about tracking with on-body monitors, it is the clinical data output that leads to a specific patient outcome. Without an outcome these technologies have little clinical relevance.
How does the Global Health Innovation Fund stand out from its competitors by leveraging Merck & Co?
First and foremost, Merck is a world-class science company. This alone gives us credibility. While the GHI Fund is established as an limited liability company to ensure agile decision-making, we do actively leverage the global capabilities of Merck. When appropriate, the GHI Fund will introduce portfolio companies to Merck to provide access scientific, commercial, regulatory and supply chain expertise. In some cases, Merck has become a customer of our portfolio companies. In other cases, Merck has promoted solutions for our portfolio companies. We believe this gives us a competitive edge over other corporate funds.
In terms of technologies, what excites you?
An area we are interested in and looking closely at is the real-world evidence and real-world data space. For pharmaceutical companies, they want to prove the real-world effectiveness of their therapies, longitudinally track outcomes of patients on therapy, and enter into value-based payment models. We are also interested in companies that provide different types of data globally, and ingest data across sources in real time and run visual analytics and other AI tools.