(rhythmic ambient music)
-: Hello, everyone.
Thank you for joining us here at the conclusion
of the JP Morgan Healthcare Conference.
We're excited to have with us two great CEOs
in the healthcare industry
and more broadly across the business community with us today
to share their reflections from this week's conference
and their perspectives for the year ahead.
So now let's get to introducing our guests.
Tom Polen from BD and Dave Ricks from Eli Lilly.
First, I'm honored to introduce Tom Polen,
the chairman and CEO and president of BD.
The $19 billion global MedTech company.
-: It's my pleasure to introduce Dave.
Dave is a Eli Lilly veteran of more than 25 years.
Dave became CEO and chair of the
company's board of directors in 2017.
After he joined Lilly
as a business development associate 25 years ago,
he has had various international leadership positions
across the world in Canada, China, and the US.
(upbeat bright music)
The talk of JPM was GLP-1s, right?
And we know in addition to their ability
to manage diabetes, obesity,
they've also been shown to help heart disease
and they're being tested for a wide range
of cardiometabolic conditions.
How should the healthcare system, the providers,
the insurers, patients, physicians,
how should they think about this class of drugs?
-: What we call is incretin super family GLP-1s,
it's been going on for a while.
But we have moved to this
kind of hyperbolic inflection point,
I think, for three reasons that make this super unique.
One, excess body weight, which we know
because for almost all adult diseases,
the first line of therapy is,
oh yeah, lose some weight.
Whether it be lot of cardiovascular conditions,
even autoimmune conditions, reproductive problems.
What we hadn't known until really the last couple years
was a couple things.
One, we could augment weight successfully
and safely at pretty big scale.
Weight loss is weight loss
and all these conditions can improve
if people get into a healthy body weight.
So the impact across the healthcare system
direct offsets and improve quality of life,
and maybe length of life seem possible now.
So in addition to the effectiveness
and safety of the drugs, in addition
to the translation to real, hard health benefits,
you have this consumer poll we probably haven't seen
in a drug class that has this kind of impact.
So big opportunity ahead.
I think we can safely say we will have,
if we can ramp up and use these rationally,
if we can get reimbursement
so there's not the massive health equity problem
that's presenting itself right now,
we could probably change the life expectancy
of Western nations.
-: So Tom, maybe I should ask you,
obviously you play in this ecosystem too.
What role do you play in the GLP ecosystem?
How is BD making it simpler and safer for patients
and providers to administer these GLP-1s?
-: Inside every auto-injector is a prefilled syringe
with a pre-attached needle that contains the drug.
And so, we invented that category.
We're investing 1.2 billion
in capacity expansion right now to support growth
of this category and other new biologics and vaccines.
One of the things that I hear most,
and I think it's going to be a ripple effect
of what's happening now in GLP-1s,
and just a huge transformational effect
that it's going to have in chronic disease overall.
So many folks that I talked to
and they started taking GLP-1s, they'll say,
"I was really surprised.
It didn't bleed, it didn't hurt.
It was much easier process to do these injections
than I thought it was going to be."
Our strong belief is that GLP-1s
are going to bring that experience to a scale
that's never been had before.
And this is going to continue to enable broad acceptance
of other biologics that are also coming down the pipeline.
(bright upbeat music)
-: Tom, you see M&A right now.
And how do you see it specific to the MedTech industry
versus the mood a year or two ago?
-: Balance sheets are much stronger now post-COVID.
People have cash, they're very active.
There's been a lot of spinouts in MedTech
over the last several years.
You're seeing greater appetite for the add-ins
in the portfolio that are getting people, again,
back in those core markets that they want to be into
with higher growth-adjacent spaces.
We've done about 19 acquisitions
over the last three or four years,
and our last one was our largest of those,
which was in the pharmaceutical automation space,
and put us as the world's leader
in pharmacy, robotics, and automation now
with about a $700 million business.
Growing nice teams in that category.
Most importantly of all is this is being spurred
by what is unprecedented innovation
that's happening within the MedTech sector.
We're looking at broad healthcare process efficiency.
No pharmacists should be counting pills anymore, right?
That's all being done by robots now.
And there's shortages of pharmacists,
all of that is transforming now.
It's fueling growth in the space.
There's true technology shifts that are happening right now
and enabled by some really exciting science
on the AI side, on the automation side,
on the biomaterials side that
create tremendous opportunities,
make a difference for patients,
and drive new value creation in the industry.
(gentle upbeat music)
-: Dave, you are active in the industry-wide dialogue
on how the US healthcare sector
needs to evolve more broadly,
both to deliver cost effectiveness
and to deliver good patient outcomes.
How do you see that happening?
And are there transformative changes coming along?
And how do we get to both an affordable system
and one that is delivering health outcomes
for our whole population?
-: For the last 20 years, I think the policy debate
mostly has been about expanding insurance coverage
in the United States.
I don't think that's the main objective anymore.
I think what we need to do is focus
on three other objectives
in terms of how we're delivering healthcare.
You touched on one point, which is
what I'd say is system-level quality.
Another way to think about that is similar outcomes
independent of where you live and what your insurance is.
And that's a health equity issue.
That's what healthcare should want to do.
And we're a really long way from that objective.
Probably the most glaring examples were during COVID
where you can look at mortality rates
by zip code and by insurance type.
The second big problem, it's affordability
in developed markets of the benefit we already have.
The demography of developed markets is changing really fast.
The ratio of taxpayers to beneficiaries is shifting fast
and no one has this math figured out.
So that's got to change
and that's fundamentally a cost issue
because particularly in the US
if we look at the cost of care,
we know the highest in OECD per patient,
the outcomes aren't really different.
The outcomes at the high end of care are different,
but the outcomes at the low end are much worse.
We can work on affordability during the patent life,
but it's probably the one thing
that actually does get cheaper.
Everything else is inflating.
XUS, I would say it's more of a ratio problem.
We have a ratio problem in the US too,
but it's much less pronounced,
which is the vast majority of healthcare costs
are labor and CapEx.
And labor and CapEx inflate and they inflate without an end.
And right now, inflation in developed worlds
for labor and CapEx is mid single digits.
That was OK when the rest of the economy
was doing that in the last few years,
but it's not going to be OK in the long term.
It's totally unaffordable.
So we have to reduce labor. That's an AI opportunity.
And we have to reduce CapEx.
That's a drug treatment opportunity.
I think Tom mentioned actually several good examples
of how we can take people out of infusion chairs
and have them sit in their living room.
So that's all got to happen.
I think actually this is one of the defining political
and policy issues, not just in healthcare,
but at the economic level
in the developed world over the next 10 years.
-: It's a combination of available technology,
business models, and regulatory support for this,
of which none of,
I'd say, we're probably moving ahead on technology
faster than we're moving ahead on really nailing out
how it's going to work in practice.
And the regulators are moving forward to catch up as well.
There's a huge dialogue over the last several years
around hospital at home.
Everyone's talking about, again, how do you reduce
that big CapEx burden that happens in the hospital?
There's a lot of of piloting going on right now,
but we've got to continue to get other elements
of the system aligned to really bring the force
to impact both equity and costs.
(gentle upbeat music)
-: GenAI has just been such a theme
on so many discussions I've been a part of in the last,
it goes across sectors.
How are you seeing it for your businesses?
-: AI has such a transformational potential.
You have to be in AI or you will fall behind.
At the same time,
we are focused on both the efficiency of AI
internally within the company,
as well as the benefits that can have to clinicians.
We've got about 15 different pilots going on in the company
focused on efficiency.
We see tremendous opportunities
to automate many basic processes again,
so that we can double down on solving
the big challenges in healthcare and improving outcomes.
On the innovation side,
we've got a couple 510K FDA cleared AI applications.
So we have software that helps pharmacists compound drugs,
manage all the inventory in the pharmacy,
then deploy the drugs up onto the floor in our Pyxis systems
and then our Alaris system infusing them the patients.
I think every one of our businesses has AI
as part of their, of active products in pipeline.
And you're seeing that across the MedTech world.
-: Translation and conversion of technical information
into words humans can read is something it's good at
and people get bored with.
So it's a big productivity game,
but also allows us to just deploy people on better problems.
Probably the other big generative opportunity
relates to drug discovery.
So here we're talking about machines
looking at the chemical space.
Chemical space is vast and the machines are good
at coming up with interesting new starting points.
For the IP-generating activity,
I mean, every drug company has to be all over this,
but probably the quick win
is more the industry-specific applications
like clinical trial optimization.
(gentle ambient music)
Probably next year we'll reach global parody
at all management levels of women and men.
We've made huge progress
in African-American promotion rates.
It's probably not a coincidence that we've become
a lot more diverse and inclusive in the last decade.
We've also 10Xed our market cap.
-: We've just gotten to make sure
that we have an equitable culture,
which we're really proud and it's been a long journey.
That the more diversity and inclusion
that we've got in the organization,
the more that we've seen it
really show up in new innovations and opportunities.
And that's been a part of our fuel
of our higher growth rates that we've seen in the company
over the last few years.
-: What a wonderful way to end this discussion.
Thank you both so much for joining.
From the very beginning where we talked about innovation
to the end where I think
both of your passionate explanations
of why taking on issues of inclusion and diversity
gets to better outcomes, gets to better innovation.
I think it's been really a very powerful
and interesting discussions.
(gentle upbeat music)