Investing Only in Companies that Deliver Scientific Innovation and Directly Address the Spiraling Costs of Healthcare
In part 1 of our interview with the co-founders of Swiss asset manager Viopas Partners, we discuss their vision for a company that will push healthcare organizations to make cost-saving a central strategic priority. How do they plan to do it? By only investing in pharma and biotech companies that deliver BOTH scientific breakthroughs AND sustainable savings to healthcare systems.
It’s no secret that payers are pushing back hard on the prices pharmaceutical companies charge for new therapies. That is having an effect not only on companies’ bottom lines and reputations but also on patient access.
Now, investors are starting to take notice – and some are applying a new approach to how and where they invest. Viopas Partners, a new Swiss company, is at the vanguard of what it believes will be a healthcare investment trend: incentivizing pharma to contain spiraling healthcare costs with a fresh investment approach.
Over the past decade the three principals in the company have, from different vantage points, observed important shifts in the healthcare environment as drug budgets have become tighter and the costs of medicines have skyrocketed.
“In the past innovation trumped everything, and with this innovation came ever higher prices. Innovation at all costs won’t work anymore,” says Michael Schröter, founding partner at asset manager Viopas Partners, speaking from the company’s Zurich office. “We don’t believe companies will survive if they continue to operate the way they are operating right now. Access restrictions will result in both top- and bottom-line hits.”
He cites several recent, high-profile examples of major drug companies that have had to make drastic cuts to the prices of novel therapies in the US and Europe for important indications – and others that have failed to secure coverage in important European countries. Pricing pressures have also weighed on the first-quarter results of some of the major players.
“We believe that companies will run into difficulties if they don’t get the price equation right from the start. Those companies that develop medicines with a superior clinical profile, as well as the ability to save healthcare systems money, will have a key competitive edge,” says Schröter, who has held executive roles at Roche and Eli Lilly.
Viopas Partners, which was founded in October 2018, is seeking to invest in biotech, pharma, medtech, and eHealth companies that deliver products that improve outcomes to patients, while not adding to or even lowering costs to the system.
“This could mean that patients spend less time in the hospital and can be looked after at home,” says co-founder Nathalie Flury, who has an 18-year track record as an equity fund manager.
Investments with Impact
The Viopas Partners team has no doubt that the trend of mounting pressures on healthcare systems is here to stay as populations age, science advances at a blistering pace, and patients take a more hands-on approach to their own care pathways.
At the 2019 Cowen Annual Health Care Conference in Boston, analysts and investors discussed the need for a different investment approach that focuses on healthcare system sustainability.
A survey of industry executives carried out by Global Data showed that more than half of respondents believe drug pricing and reimbursement constraints will be the factor that weighs most heavily on the pharmaceutical sector in 2019.
“Healthcare costs are one of the most pressing issues we are all facing, but this is not something that is included in the traditional environmental, social, and governance criteria that have so far guided sustainable investments,” Flury says. “Investing in companies that are taking determined steps to address healthcare costs in a sustainable way is a great way to realize a true socioeconomic impact.”
Viopas Partners anticipates that the innovative companies it’s backing will outperform markets as they address this overarching macro trend, Flury adds.
A growing number of investors and companies seem ready for the Viopas approach: “Responses we have received have typically gone from ‘This is very interesting' to ‘This is the right thing to do’ to ‘How can I participate and invest?’” Schröter says.
Viopas Partners, which launched its first certificate in April 2019, is the first asset manager that enables investors to put their money in healthcare companies that are directly addressing the spiraling costs of healthcare. The Actively Managed Certificate that Viopas has launched is investing in listed biotech, diagnostic, medtech, and eHealth firms that develop and deliver value-based treatments for improved outcomes.
“Coming from the industry, I saw firsthand the need patients have for new drugs – as well as the challenges for payers,” Schröter says. “Viopas is the first asset manager to work with investors to address these challenges by offering advice and guidance to other financial institutions. We have a good team with the right skill sets, and we can move rapidly.”
If Viopas Partners’ new investment approach is successful and others follow suit, this approach, rather than noisy public debate and political posturing, could provide companies with the incentive they need to put sustainable access strategies front and center of their business models – right from the start.
In Investing in Sustainable Healthcare: Part 2, Schröter explains what companies can do to attract firms looking to invest in companies with more sustainable commercial strategies.
The Viopas Team
Michael Schröter: Over the last 20 years, Schröter has held several executive positions within the R&D and commercial organizations at Roche and Eli Lilly. He also co-founded a biotech company. In his last role at Roche, he was responsible for establishing sustainable, innovative pricing models with national payers in over 20 major markets.
Nathalie Flury: Flury has an 18-year track record as an equity manager. She invested a combined $3.7 billion in listed and private equities for several European-based mutual biotech and healthcare funds, and managed biotech and life sciences funds for Clariden Bank (Credit Suisse), Global Asset Management, and Pictet Asset Management. She also provided start-up and growth capital to more than 10 private companies by investing in ventures such as Biomarin Pharmaceuticals and several Swiss private companies.
Simon Nebel: Nebel has worked for four private equity vehicles in healthcare and renewable energy over the past 20 years as managing partner at Aravis, with a total of more than 250 million Swiss francs under management.