In the current biotech revolution, often viewed as having a more significant impact than the digital age, physicians can utilize their expertise by investing in life sciences startups. This investment strategy adheres to the principle of "invest in what you know," enabling physicians to make informed decisions that can spur both economic and professional growth. Consider the potential for wealth creation if insightful physicians who, understanding the needs of diabetic patients in the late 1970s, have had the opportunity to invest early in pioneering companies like Genentech or Amgen. The VIC Tech Journal discussed this in 2019, showcasing how physicians can be instrumental in fostering healthcare innovations while reaping significant financial rewards. This synergy of medical knowledge and investment acumen positions physicians to be key contributors in shaping the future of healthcare through strategic investments in live sciences startups.
Physicians should invest in life sciences startups from a fiscal standpoint due to their potential for substantial financial returns. Over the past 20 years, the biopharmaceutical industry, comprising the biotechnology and pharmaceutical sectors, has consistently outperformed the Standard & Poor's (S&P) 500 Index. Specifically, biotech has delivered a 12% Compound Annual Growth Rate (CAGR) and pharma 9% in total returns to shareholders. Notably, from 2011 to 2015, the biotech sector saw a Total Return to Shareholders (TRS) of 28% CAGR. This growth created almost $1.7 trillion in shareholder value above the S&P 500's performance, particularly in the last decade. Despite a 14% decline in 2016 due to changing market expectations, public biotech companies' overall revenue and profit margins have significantly increased since 2005. Similarly, the Medical Technology (MedTech, including devices and diagnostics) industry has been a lucrative investment, surpassing the S&P index by nearly 15 percentage points over three decades, including high-growth periods in the early 1990s, mid-2000s and late 2010s. Looking ahead, life sciences companies are expected to see long-term robust growth. The MedTech sector is capitalizing on the rising demand for wearable health devices, emphasizing innovative product development and Research and Development (R&D) investments. The biopharmaceutical sector is focusing on next-generation therapies, including developing numerous gene therapies and Chimeric Antigen Receptor T-cell (CAR-T) treatments, despite challenges like inflation and drug pricing pressures.
On a professional level, physicians should invest in these startups not as mere financiers but as visionaries shaping healthcare's future. They bring their expertise and insights, steering the industry towards revolutionary patient care advancements. Their investments make them pivotal in a collaborative process, addressing modern healthcare challenges with practical, patient-centric innovations. This synergy between physician investors and life science startups is crucial, creating a conduit for medical expertise to flow into entrepreneurial ventures, propelling forward-thinking medical devices, software, and therapies. However, the life sciences investment landscape has challenges. It's a high-stakes game of risk and reward. Early-stage companies, particularly those pre-market, often have limited revenue and capital. Yet, the rewards here can be substantial for the astute investor. Balancing potential rewards against risks requires thorough evaluation and a keen eye for opportunity amidst volatility.
Physician-investors gain considerable advantages when they join forces with companies that focus on creating new ventures, which is crucial for making successful healthcare investments. VIC Technology Venture Development is one such company that excels in this area. VIC Tech is notable for discovering and developing promising technologies from universities and medical centers worldwide, going beyond mere financial investment. They offer strategic advice and continuous support, thereby improving the investment choices and risk management tactics of physician investors. For example, a pulmonologist interested in the challenge of delivering high doses of medication directly to the lungs might find Nob Hill Therapeutics' work intriguing. Similarly, an orthopedic surgeon looking for innovative ways to address infections in implantable might be interested in the approaches Solenic Medical is exploring. Importantly, physicians involved with VIC's Investor Network (VIN) have seen a remarkable 38% Internal Rate of Return (IRR) on their investments. Being part of VIN enables physicians to spread their investments across a range of companies, developmental stages, and sectors within the life sciences. Additionally, physicians can engage more intimately with these ventures, assuming roles from informal advisors to chief medical officers, thereby making substantial contributions to healthcare innovation.
Our physician investors play crucial advisory roles in the VIC ecosystem; their expertise is essential for guiding strategic and growth initiatives in these companies. They are not just advisors but also participate in the early stages of startup development and technology evaluation. A notable example of their involvement is Cellia Science, Nob Hill Therapeutics, and Enhance Diagnostics, a new VIC Tech enterprise. These contributions are advisory and financial, as they earn equity stakes in these companies. This blend of financial backing, advisory roles, and active involvement in development reflects the commitment of VIN Physician Investors to fostering innovation in the healthcare sector. Each venture they undertake addresses unique medical challenges, demonstrating these professionals' diverse expertise and engagement in advancing medical technology and treatments.
Partnering with specialized life science venture creation/builder/studio firms gives physicians a significant edge in early-stage investing. These firms' seasoned expertise in evaluating medical and market potential is a vital filter in identifying the most promising opportunities. This partnership enhances physicians' understanding of investments and ensures they are channeled into financially promising startups and at the forefront of medical innovation. Such active engagement represents a step toward being part of healthcare solutions that improve patient care, introduce efficient systems, and potentially lead to revolutionary therapies and diagnostics. In doing so, physicians contribute to their financial growth and the collective advancement of medical science and patient well-being.
REFERENCES:
- Isaacson, Walter. The Code Breaker. New York: Simon & Schuster, 2021.
- Hall, Stephen. Invisible Frontiers: The Race to Synthesize a Human Gene. New York: Oxford University Press, 2002.
- Baluch, Amir. "Life Science Impact Investing and the Physician Entrepreneur." The VIC Tech Journal 1, no. 3 (2019).
- De Backer, Rehan, Thomas Ruby, and Amit Saxena. "Biopharma Valuations—Onward and Upward?" McKinsey & Company, September 29, 2017. https://www.mckinsey.com/.
- "Accelerating Growth in MedTech: The Next Surge in Portfolio Moves." McKinsey & Company, May 10, 2022. https://www.mckinsey.com/.
- Lyon, Paul. "2023 Outlook for Life Sciences." Deloitte, December 6, 2022. https://www.deloitte.com/.
- Goforth, Calvin. "VIC Technology Venture Annual Report" February 2022.
- "Internal Communications." VIC Technology Venture Development, 2023.