HRI spoke with PwC principal James Prutow about how drug pricing and generic utilization are influencing deal activity, and the new ways that companies are using data – and partnering with health IT firms.
One of the “inflators” from our “Medical Cost Trend: Behind the Numbers 2020” report is that drug spending will grow faster as the impact of generics wanes and specialty drugs make up a larger share of total spending. What’s happening in the deals space that is accelerating this or responding to this development?
I think that’s going to continue to be a hot area for deal activity overall. Many health IT companies are providing a sustainable business model, an annuity type model, while also providing value into the marketplace overall.
HRI: One of our BTN report implications for pharmaceutical and life sciences companies was to “tell your value story using data.” How are deals supporting or driving the value story that PLS companies are being asked to tell? Is the need for a value story driving deals?
James Prutow: I think the deals we’re seeing are twofold: There is movement in health IT, and it continues to be an extremely hot subsector for deal activity. I don’t see that changing any time soon.
More specifically, some of the health IT companies are working on how to best utilize all of the data out there, how to mine it for the implications but also to identify the value opportunities, and provide those insights back to pharma and life sciences companies and to providers and payers.
So I think that’s going to continue to be a hot area for deal activity overall. Many health IT companies are providing a sustainable business model, an annuity type model, while also providing value into the marketplace overall.
In pharma and med tech deals, there’s also a lot more happening around data and how a company provides its value proposition to the marketplace. They are moving away from a pure pricing approach, and we’re seeing a lot more due diligence to be able to analyze and better understand what a company is truly doing with the data, and how they’re coming up with the value proposition.
But we’re also seeing opportunities where companies are just starting that journey. Maybe they’re at the kindergarten level and you can see a pathway for them to get to that high school level pretty soon.
That helps determine what the opportunity is going to be as they develop more robust processes for using their data and start plugging in more broadly to some of these external players, such as the health IT companies.