As usual in the life science universe, there were a number of “reactions” to market forces over the last week. Shire is to remain independent as AbbVie bows to the growing aversion to inversion strategies, a somewhat short-lived financial strategy that spawned a slew of major potential acquisitions for tax purposes including Pfizer’s earlier pursuit of AstraZeneca. However, the trend towards breaking up larger companies continues with news that GlaxoSmithKline is exploring an IPO of the minority shareholding of its 80%-owned ViiV HIV unit created in partnership with Pfizer. In addition, Reckitt Benckiser announced plans to spin off its pharma division into a separate stock listing.
On the funding front, there was another IPO for a UK company with Manchester University’s spin-out C4X Discovery (formerly known as Conformetrix) raising £11M on the AIM market to progress its drug development technology, along with news of the latest Greg Winters company, Bicycle Therapeutics, raising another $32M. Angels in MedCity was launched by MedCity, London Business Angels and Angels4LifeSciences to mirror the success of the Angels in the City model in London, which has nurtured around 300 new investors and helped 39 companies to raise over £30M of new investment since its launch in 2011. MedCity follows on the successful Tech City initiative in the Shoreditch area of London and seeks to build on the growing life science community surrounding Kings Cross.
But the big news in the UK was the announcement of a five-year plan for the NHS by its new Chief Executive, Simon Stevens, a former expat fresh off 10 years as Executive Vice President of the UnitedHealth group in the US. Stevens is NHS born and bred, straight into the service after university, rising through the ranks in rural and London teaching hospital environments, until he became Tony Blair’s healthcare adviser where he was architect of the 2000 Plan. He left for the US before Alan Milburn’s 2006 act, which first opened up the door to the private sector.
In the NHS, the 209 clinical commissioning groups (CCGs) currently buy services separately without any cooperation, thus wasting money on lawyers to avoid falling foul of EU competition law. Instead of fragmentation, Stevens wants total integration of all services, including things that were broken up way back in 1948 when hospitals and the community were divided. The goal will be to create incentives for people to be treated in community clinics run by GPs with appropriate diagnostics and specialist treatment on hand.
Mindful that Stevens has independence in that he is employed by the board of NHS England and not the Secretary of State for Health, Jeremy Hunt, the report is bold enough to assert that the NHS needs more money from the Treasury, £8B to be precise at a minimum. Meanwhile The Commonwealth Fund in the US, which conducts annual research, ranks the NHS as the most effective, best value service in the world. Some of that is down to an ability to keep healthcare spending at around 9% of GDP, significantly lower than many countries, especially the US. That said, the reality is that the NHS does well with what it has, as 90% of its care is provided by its GP gatekeepers, but its low ranking in the global spending league exerts tremendous budgetary pressures.
Next year, the UK has an election in May. The current budget for the NHS stands at £100B a year but all the political parties are already talking about what they would do in the next Parliament. Simon Stevens may be free to write a report asking for more money but, with power devolved from him, he’ll have to use the power of his personality to lead and rely on the common sense of his plan to pull back a fragmented NHS and point it to an integrated future.
Best regards
Nigel Gaymond