| | | |   | Good morning, all. Damian here with some sobering deal numbers, the harsh reality of genetic testing, and a contrarian take on Aduhelm. | | | There was no New Year buying spree The value of a given drug company is intrinsically tied to how much a larger one might be willing to pay for it. In 2022, not many drug companies got bought, and valuations dropped across the board. Based on early returns from 2023, that trend's unlikely to change.
There have been just 66 acquisitions in all of health care so far this year, according to data from the Financial Times, which is below the nearly 250 deals in the same period in 2022 and the lowest number in 20 years. Looking just at biotech, 2023 has brought 22 acquisitions, far below last year’s 70.
The ongoing paucity of dealmaking suggests biotech stocks, which fell about 30% last year, might have to sink further before the industry’s deepest pockets find them attractive. Then there’s the looming threat of a recession, the specter of a newly vigilant Federal Trade Commission, and the debate over how a new price-negotiation law will impact the sector, each muddying the M&A incentives in 2023. | Why the future of genetic testing isn’t ‘volume at all costs’ Last year, the genetic testing firm Invitae cut more than one-third of its workforce and began a massive pivot with implications for the entire industry: Instead of “a philosophy of volume at all costs,” CEO Ken Knight said, Invitae read the writing on the wall and prioritized actual cash-flow.
Speaking to STAT’s Jonathan Wosen, Knight said Invitae’s shift is part of an evolution among companies selling genetic tests. For years, the sector modeled itself after the fast-growing tech companies of yesteryear, burning through cash in hopes of recruiting enough customers to corner a market. Medical reality and market conditions revealed that to be a losing strategy.
“The industry is learning that almost unlimited access to capital, chasing testing volume and adding cost on the back end is not sustainable,” Knight said. “And that was a common occurrence. I think you’ve seen a lot of people — a few before us, but many after us — decide that is a recipe that no longer is the right course.”
Read more. | Home-based care: An old approach that’s transforming healthcare The pandemic created opportunities to rethink ways we provide healthcare to ensure everyone has access to high quality, affordable care on their own terms – one of those approaches is in-home healthcare. Andrew Agwunobi, M.D., MBA, President of Humana Home Solutions, discusses the benefits of providing care in the home including building more trusting relationships between patients and clinicians, allowing for more in-depth conversations and limiting exposure to illness and infection, especially among older adults. Read more. | Don’t blame Biogen for acting like a drug company That’s according to public health researcher Daniel Eisenkraft Klein, who points out that Biogen’s decision to maximize its potential profits by setting a high price for Aduhelm was simply a matter of a drug company acting according to its incentives. If the U.S. wants to avoid a similar debacle in the future, it needs to change the systems that brought Aduhelm.
Writing in STAT, Eisenkraft Klein argues that better funding for the FDA, broader pricing negotiation, and mandating clinical trial diversity could have averted some of the major controversies that came with Aduhelm’s approval and commercial rollout. Criticizing Biogen, while understandable, misunderstands the root causes of the issue.
“As long as pharmaceutical companies are expected to do anything outside of maximizing profits, people will continue to be frustrated,” Eisenkraft Klein writes. “Let’s stop expecting better from industry and start focusing on the systems that enable their practices. Any other strategy will continue to disappoint.”
Read more. | Last week was a lot  You can be forgiven for missing some of the news out of this year’s J.P. Morgan Healthcare Conference (or tuning it out altogether). Here are some highlights from the industry’s biggest annual meeting.
Everyone’s worried about money. Nearly 70% of biotech insiders surveyed by STAT said financing — raising venture capital, launching an IPO, or selling additional stock to further fund R&D and other operations — will be a headwind in 2023.
Even Google has its limits. Verily, a life sciences spinout of Alphabet, is shaking up its executive ranks and laying off 15% of its staff, coinciding with a tumultuous effort to turn the company’s blue-sky ideas into actual revenue-generating products.
Ginkgo has a plan. Ginkgo Bioworks, the synthetic biology company that has lost nearly 90% of its market value since 2021, spent the week making its case to drug companies. Jason Kelly, the company’s co-founder and CEO, told STAT Ginkgo’s $1.3 billion in cash gives it enough time to prove that the promise on which it went public has real merit. | More reads - Congressional Medicare advisers warn of higher drug prices, despite new price negotiation, STAT
- Drugmakers Eli Lilly, AbbVie leave U.K. medicine-pricing agreement, Bloomberg
- Novartis' CEO is charging ahead in cutting tens of thousands of jobs. Business Insider
- Covid-19 drugmakers pressured Twitter to censor activists pushing for generic vaccine, The Intercept
| Thanks for reading! Until tomorrow,  | | | |
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