Healthtech

Healthcare leaders brace for short-term volatility in election year

January 14, 2020
SAN FRANCISCO—Healthcare is in the political spotlight ahead of the 2020 US presidential election as some Democratic candidates continue to espouse proposals like Medicare for All and drug price caps.

However, industry leaders said Tuesday during a keynote panel at J.P. Morgan's annual healthcare conference that the presidential race is unlikely to reshape the long-term structure of the sector.

"I think election cycles will cause short-term disruption as always," said Sandra Peterson, a partner with private equity firm Clayton, Dublier & Rice. "But that's a part and parcel of investing in healthcare … I try to keep that big-picture proposition in mind."

Emma Walmsley, CEO of pharmaceutical giant GlaxoSmithKline, agreed. "You can't be short-term distracted, because the long-term fundamentals will be the same," she said.

As one of the most regulated markets, healthcare also commands major cash. The US healthcare industry represents about $3.5 trillion in annual spending, according to a 2019 report by Deloitte. Within that, healthtech—defined as technology-enabled healthcare products and services primarily used outside a hospital or doctor's office—garnered nearly $11 billion in venture dollars across 870 deals as of 3Q 2019, according to PitchBook estimates.

Several Democratic candidates have proposed major changes to healthcare in America. Vermont Sen. Bernie Sanders' platform features a Medicare for All single-payer system, which would effectively eliminate private health insurance companies.

Similarly, Massachusetts Sen. Elizabeth Warren has also shared her idea for a $20.5 trillion Medicare for All program that could theoretically overhaul how the healthcare industry operates.

However, Peterson remained skeptical of an industry overhaul, even if legislation makes it to Congress.

"I do think that change is likely of some sort. Massive structural change is not likely," she said. "We can't get it done, there aren't the votes. Lobbyists drive the show."

Featured image via Eliza Haverstock/PitchBook

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