Dec 15, 2017, 5:57 PM ETConference Presentation, Lecture, Keynote

Challenges in Healthcare Innovation

Healthcare currently accounts for approximately 20% of GDP, a figure projected to double within the next three decades.
The US biopharmaceutical sector invests roughly $75 billion annually in research and development (R&D) to pursue a domestic drug market valued at $500 billion.
Despite massive investment, the industry faces "Eroom's Law" (Eroom spelled backward), where the cost and time required for drug discovery have increased exponentially over recent decades.
The traditional path to market averages $2.5 billion in cost and 10 to 15 years, with a success rate of only 1 in 10,000 investments yielding a marketable product.

Success in drug discovery correlates strongly with fundamental knowledge of disease biology, as illustrated by the contrast between sickle cell anemia and Alzheimer's disease.
Sickle cell anemia is a high-probability target for cure due to a well-understood genetic mechanism (hemoglobin gene error), with gene therapies expected to solve the condition within a decade.
Alzheimer's disease remains a persistent failure point due to unknown causality; recent Phase 3 failures like Axivan highlight that lack of biological understanding leads to ineffective or toxic outcomes.
Vast majority of drug failures occur because developers lack clarity on underlying disease biology, often relying on luck or serendipity even when mechanisms appear sound.

The industry is shifting from an experimental science to an engineered discipline driven by three primary accelerants: high-speed genomic sequencing, single-cell resolution atlases (e.g., Broad Institute), and AI-driven data analysis.
Therapeutic modalities have evolved chronologically from small molecule chemicals (50 years ago) to large molecule proteins (25 years ago) to "living medicines" like cell and gene therapies.
Future innovations include "intelligent medicines" engineered to possess logic capabilities, enabling cells to detect disease, execute treatment, and self-terminate.
Companies like Illumina have validated the R&D tool market, generating $30 billion in market cap through sequencing technology, while others like Kite Pharma and Spark Therapeutics have successfully launched curative cell and gene therapies.

Traditional preclinical models (mice and petri dishes) are being replaced by organ-on-chip technologies, such as engineered lung chips, to provide predictive human safety and efficacy data.
Clinical trial recruitment is being disrupted by tech giants; a pilot project between Facebook and the Michael J. Fox Foundation reduced recruitment costs and time by 96%.
Regulatory bodies are evolving from perceived barriers to active collaborators, evidenced by approvals for the first gene therapy, cell therapy, digital therapeutic, and digital pill with sensors this year.
Payors and providers are shifting focus from cost-cutting to value assessment, demonstrating willingness to pay premiums (e.g., a $2 million per course therapy for blindness) for transformative cures.

Biology is transcending healthcare to disrupt food, consumer goods, and energy sectors, with companies like Bolt Threads using bacteria to create silk and leather and Asimov redefining manufacturing via cell design.
DNA is being utilized as a data storage medium; scientists have successfully encoded video footage into bacterial DNA and retrieved it, demonstrating biology's capacity as an information technology.
The value chain is achieving rare alignment, accelerating the transition from discovery to patient care and enabling precision medicine where the right therapy reaches the right patient at the right dose.
The speaker concludes with the concept of "biology eating software," positing that biological systems are redefining the fundamental mechanics of information technology itself.