Healthcare surprises for 2020 from top VC investors

Healthcare surprises for 2020 from top VC investors

2020 is shaping up to be a pivotal year in healthcare. 

From a booming IPO market, to pharma companies getting more serious about using artificial intelligence to discover and develop new drugs, healthcare venture investors have no shortage of expectations about what’s ahead for the industry over the next year. 

While gathering predictions for the year ahead, we asked 10 venture capitalists what they thought could be the biggest surprises to hit healthcare in 2020. That is, if we were to look back on 2020 and think, “Wow! I can’t believe that happened this year!” what might that be? 

To be clear, the surprises below aren’t predictions, exactly. But if the events do occur, they could have big implications for investors and patients.

The answers we got from the VCs included everything from big legislative changes in healthcare to companies like Amazon or Walmart more directly owning pieces of the $3.6 trillion healthcare industry.

Here’s what surprises might lie ahead in 2020.  

US government actions could be the biggest surprises of 2020

A common refrain of surprises venture investors think could rock 2020 was government action. 

For Venrock partner Bryan Roberts, having the government do something material in healthcare would be the biggest surprise. That could be anything on healthcare costs or drug prices that could change what Americans pay for their healthcare. It wouldn’t, he said, include changes in which hospitals have to post their prices, a rule introduced by the Trump administration in 2019. 

“I don’t think anything material’s going to happen,” Roberts said. 

Similarly, Andreessen Horowitz general partner Julie Yoo said she’d be surprised if “Medicare for All,”  the idea of a single-payer healthcare in the US, moves from an idea to a reality during the 2020 presidential election year. 

“If it actually happens, that’d be a huge shocker,” Yoo said. 

Read more: A rising star at Andreessen Horowitz explains why companies that make drugs will start delivering healthcare in 2020

7Wire partner Robert Garber agreed. “I would look back and be surprised if some version of Medicare for All or public options actually makes its way through legislation,” he said. 

While presidential and congressional elections take place in November 2020, the officials elected won’t begin their terms until 2021. 

In December, the House passed a bill backed by Democratic Speaker Nancy Pelosi aimed at lowering drug prices for Americans. 

Krishna Yeshwant, who leads GV’s life-sciences team, said that the biggest surprise of 2020 could be if a bill like that were to pass. If it did, he said, it could dramatically reduce the number of new companies working on new approaches to treat diseases.

Big tech gets more engrained in the healthcare industry

Many of the surprises that the VCs thought could rock 2020 had everything to do with the looming presence of big tech companies who have been increasingly making their way into the healthcare industry over the past few years, as well as retailers like Walmart. 

Read more: Companies like Walmart, CVS, and Amazon are beefing up their healthcare strategies. Here are their plans to upend the $3.6 trillion industry.

In particular, it’d be a big surprise if those companies were to make direct acquisitions that get them into entirely new lines of business. 

For instance, Maverick managing director Ambar Bhattacharyya said a big surprise would be if Amazon, Apple, Walmart, or Google were to buy a health insurer. If that were to happen, he said, “I think the landscape will change significantly.” 

Read more: A top investor at a $400 million VC firm predicts 2020 will be the year that prescription weight-loss treatments get sold online, just like Viagra

NEA principal Lily Huang said she’d be surprised if Apple bought a provider group or became a provider themselves, while Lux partner Zavain Dar said he’d be surprised if Google or Amazon got into the business of developing new therapeutics. Apple for its part operates health clinics for its employees called AC Wellness that are independent from the tech giant.

Already, the moves the unconventional healthcare players have made in the industry — in particular Amazon — have set it up so it’d be a big surprise if in 2020 if they were to turn their backs on it completely. 

“I would be shocked if Amazon walked away from healthcare,” Lux partner Adam Goulburn said. 

Read more: VCs at $2.4 billion Lux Capital think 2020 will be the year Big Pharma companies buy startups that ship Viagra and hair-loss pills to your door

Fundamental changes to the market could be big surprises, too

For Alyssa Jaffee, vice president at venture firm 7Wire, the most shocking thing to come out of 2020 would be a fundamental change to how she invests in startups. 

That is, if the healthcare industry abandoned its push toward a more consumer-friendly market that pays for how well care is given, rather than how much of it is performed. 

“I think that the tailwinds on consumerism and the tailwinds on value based care are so strong. It is a matter of when not if,” Jaffee said. “I would be shocked if the market flipped.”

Throughout 2019, there were predictions that the market was headed for a recession in 2020. NEA partner Blake Wu said said he’d be surprised if that were to play out. 

“It doesn’t look like 2020 is going to be the year we enter a recession,” Wu said, pointing in part to the low unemployment rate in the US. 

“It looks like the global — especially the U.S. — economy will be able to withstand any kind of hit,” Wu said. 

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