Once medicine used to completely depend on the knowledge and skills of a doctor. But today, with the development of technology and approaches to rethinking the future of health care, it is becoming more and more like an engineering activity. Steve Burrill, one of the leading U.S. investors in biotechnology, told us about the future of medicine.
Steve Burrill is a founder and Chief Executive Officer of “Burrill & Company” - the company dealing with venture investment banking services in the life science industry. The company provides its services worldwide. Before founding his company in 1994, Mr. Burrill worked for twenty eight years for “Ernst & Young”, managing and coordinating the services provided globally by the company to its customers in biotechnology, science of living systems, high technology and manufacturing companies. Also, Steve is a founder and chairman of the National Science and Technology Medals Foundation (NSTMF).
We started to create a bioindustry in the U.S. a long time ago, and those 10,000 biotech companies that exist in the world today (90% of them are engaged in healthcare) did not happen overnight. I have been taking part in the development of this industry for over 45 years and I’m well-versed in the features of this market, its technology and the creation of value. It’s important to mention that competitive dynamics in the biotechnology market have hardly changed during the 50 years of its existence. Let’s take China. Here a new city with a population of 1 million inhabitants is being built every 15 days. The population of India and Brazil is growing rapidly. The new middle classes are able and willing to pay for healthcare and improvement in healthcare is the first thing countries want, as they go on improving the quality of life. This means that healthcare opportunities are large, so important to create products and solutions that can satisfy these wants.
- How is the capital market developed?
A sustained capital market is critically important to the growth of our industry. Last year, U.S. investment in the biotechnology industry amounted to $ 55 billion. Even in a recessionary 2010 we managed to raise $ 50 billion. My own company spends between $100 and $200 million a year on investments in biotechnology, and now our investment portfolio is approximately $ 1.5 billion.
- What system changes will occur in medicine according to your expectations?
Many European countries, as well as Russia and the United States, are facing the problem of an aging population. In the USA for instance, 20% of GDP is spent on health care and 60 % of that amount is spent in the last year of person’s life. The main part of the expense (in the U.S. it is 75%) is associated with chronic diseases. That is, what used to kill us can be treated today so increasing life expectancy. I often cite an example of San Francisco. 20 years ago people used to die from AIDS in 1-2 years after being infected, but today we have protease nucleoside analogs, producing a decrease of viral load so that you will be more likely to die from other "natural" diseases than from AIDS.
We were able to do a lot, but at too great a cost. So when it comes to your wife or grandmother, you may want to extend their life even for a few months, but from the standpoint of societies it is not cost-effective. At some point, we tried to understand what will be useful for populations in general. We conduct clinical studies of a wide range of drugs to identify the most effective ones. But the results show that in the U.S. 55% of prescribed medicines do not benefit patients. The reason for this is great difference between people - what works for one person, doesn’t automatically benefit the other one. To solve this problem means to make medicine personalized. If we know the specific unique features of the human body, all of its genetics and what is currently happening, we will be able to choose the required medicine for each disease. Biotechnology lives in a very complex world today.
We are heading towards personalization at a greater rate, but even now we are moving towards prediction and prevention. We will treat people before they get sick. The main consequence of this is that value will be transferred from the pharmaceutical sector to diagnostic sector, although historically drugs had the biggest budget. Today things are changing - diagnosis helps us understand who we are and what drugs are good for us. This means that we are again reinventing the healthcare industry, and at the same time, we are making the transition from disease treatment to maintenance of well-being and personal welfare.
Our work is to use this vision of the future in order to design an industry which will provide you with the appropriate services and products. Pharmaceutical companies are the dinosaurs of today's generation which need to change their business models before they become extinct. Therefore, we must develop the industry around technology that will be important for the next 25 years, only in this case we begin to consider a completely different source to provide health care services - health maintenance rather than treatment. These are fundamental and serious changes.
- But the pharmacologic lobby is very strong. Why would corporations refuse delicious tidbits when they can earn billions of dollars for those drugs that they have already developed?
I don’t think that in the future any medication will bring excess profit because we are in the era of generic products. Even today everything that is consumed in India and China is generic. In Russia and Brazil there is also high proportion of generics. Even in the U.S. 76% of the medicines consumed are generics and this tendency will continue to grow. That is, we live in a world in which the innovations associated with new drugs were rewarded, for now a world where something entirely different will be rewarded. We are working in the innovation business, but if we continue acting the same way as before, our innovation won’t pay off. There are excellent opportunities to solve not only health problems, but also problems of climate change, water purification, agriculture development and energy security with the help of biotechnology.
- What kind of leading-edge technology related to the diagnosis and personalizing can we expect in the future?
Think for a moment about what happens when you find out that you are sick. Firstly, you wait for the beginning of the disease. Then you rush to hospital and try to figure out what to do. And then you begin your successful or not very successful treatment. You won’t need to do all this in the future. We are now developing a system, a key element of which is just an ordinary cell phone, equipped with a special chip. All you need is to periodically put a little saliva, blood or urine on the screen. The cell phone will connect with the most powerful computers that will say what is wrong with you today. This system will work the same way as GPS. Just imagine, today 6 out of 7 billion people already have cell phones. So even being in the African desert or Amazonian jungle you are connected with the rest of society via phone. So the phone is also a good way to provide each person with access to healthcare.
- Okay, but then what will be the source of future income for pharmaceutical companies? Will it be paid access to their supercomputers?
Technology companies have always received their income through the value of the produced product, which could be any medicine, device or kind of service. They thought of how to make and sell it. But in the future the value may be outside the product. Let’s take Google. You use it when you search for something, but this service is provided to you free of charge. Then what is the revenue model? They sell banners, advertising, information about who, when and what exactly the person is searching for, they create value outside the product. Can you earn money from it? Actually, Google is one of the richest and most profitable companies in the world and the same can be said about Twitter, Facebook and other IT- giants. Our industry should consider this model.
Now let’s talk about pharmaceutics. A system connecting a biotech company with any person on earth via a cell phone is the same wonderful area as advertising is for the Internet search engine. Imagine that you will have, for example, a database with all 350 million people with diabetes. You will know who has what type of diabetes, who and how they react to insulin in order to provide the best methods of treatment. This means you will also be able to determine how much medicine will need to be produced and to send to what countries, what tendencies are there in morbidity rate changes and what the consumption forecasts are... Can you imagine what value this information will have for some companies? Therefore, the problem-solving model to create value not through the product but elsewhere can definitely be very successful.
The impact of technology today is very impressive, and it completely changes all industrial structures which we currently have. It’s not sensible to create something new based on old ideas. At best, it will last for only a few years because the markets of tomorrow will be very different from today.
- What other revolutionary technology in medicine should be expected in 25 years in addition to cell phone chips, which you have mentioned? If possible, tell us about two or three of the most interesting technologies in your opinion.
I will not speak in detail about these technologies. Just will say that it will be connected with stem cells, regenerative medicine, high-speed low-cost sequencing.
- If the idea of preventive medicine is
to be realized, humanity will face a lot of new problems and challenges. If
people are treated before they get sick, it is obvious that they will live
longer (possibly they will achieve immortality). The consequences of this will
be the lack of resources and food, overcrowding, and new wars. Do you have any
idea what to do about this? What way out do you see?
We won’t live forever. We will not increase lifespan, but we will increase health span – the length of time we can lead healthy and productive lives. One in three babies born today will live to be a hundred.
- In general, should the investor be responsible for what startups he chooses as objects for investment? Such a question is usually asked to scientists, the results of whose work can do people both good and bad. The standard answer "no" is the responsibility of those who use the research results. But scientific discovery is almost always the result of joint work of a scientist and an investor. What do you think about it? Do you take responsibility for the results of what you are financing?
Sure, investors pick which companies and products they support and build. Not all science projects deserve a ‘business’. If I choose to finance a company we all do everything we can to create value: value for patient; value for Society; value for investors.
Thank for the help to Sarah Thompson - Executive Assistant to Steven Burrill.
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