As part of a continuing effort to rebrand myself as a healthcare acolyte, I went to the club-led Healthcare Conference this past weekend.  While I haven’t mentioned them much here, conferences are a continual part of the HBS experience.  There are probably conferences on at least 80% of the weekends here (examples: the VC/PE conference, the Middle East conference, the Entrepreneurship conference, the Women’s Association conference — they’re everywhere!)  They’re usually pretty amazing, too — HBS can leverage the name & student body to bring in some major heavy-hitters.

I’ve found that I’m usually exhausted of business stuff by the weekend, so I rarely take advantage of these events.  I mean, seriously, who wants to spend all day Saturday in a conference when they’re in class / reading cases for 9+/hr day every weekday?  Alas, job searches require sacrifice, so I stayed most of the day:

1. Keynote with the CEO of Intuitive Surgical
2. Personalized Medicine with a Pres. of Genzyme & a VP of Medco
3. Biotech/Pharma with Directors of Genentech & Merck
4. … among others.

Personalized Medicine Panel

Pharma / Biotech Panel

Of course, the real point of conferences is networking. I think this is lost on many people.  Sure, the panels will be interesting and all, but it’s really about meeting the people next to you, walking around during the breaks, and talking over lunch / cocktails.  I didn’t pursue it all that aggressively (I was mainly there to have something to chat about during interviews), but it’s surprising to me how many people just sit there and take copious notes.  It’s not like the panelists are going to say anything that you can’t find on-line!  That said, here are a few of my informational takeaways:

1. Robotic-assisted surgery is an amazing technology!  There was a short video clip of a doctor peeling a grape with precision robotics… very cool.  The market thinks so, too: Intuitive already has a 70% share of complex prostate surgery and has seens almost 300% CAGR!  I wish I had invested in this…
2. More $ were spent last year on diagnostics than on the last 20yrs combined.  Most of the Personalized Medicine panelists see diagnostics (coupled with pharma-solutions) to be the new key to the marketplace.
3. The pharma panel was particularly interesting.  Three huge questions: Why is pharma still vertically integrated when almost every other industry has disaggregated? (answer: 20yr product life cycle… or maybe they’re finally experimenting with specialization…?)
4. What’s big pharma going to do when all drugs fall off patent by 2012? (answer: acquire biotechs with full pipeline…?)
5. What’s going to happen in the face of an even more difficult pricing environment: excess sales & manufacturing capacity, int’l price caps? (answer: consolidation…?)

After a quick examination of my rapidly declining investment account, I decided to go with the $150 week-long Boston Healthcare IXP (instead of the $5-$10k total expenditures required for some of the more exciting Treks and IXPs).  It wasn’t quite the same as standing on The Great Wall while opining about Chinese trade barriers, but it did have a few interesting moments:

• The “History of Surgery” from the Pres. of the Int’l Transplantation Soc. along with a slew of other Harvard Med. Professors.
• A discussion on Medical Errors with a Chief of Surgery at BWH with an afternoon of touring the BWH Simulation facility.
• A lecture / case with Michael Porter of “Five Forces” fame and recent co-author of Redefining Healthcare.
• Pharma Research from a director at Novartis with an afternoon of touring the R&D facility.
• Regulation with the former Commissioner of the FDA and the former Administrator of Medicare.
• Venture Capital w/ 4 Healthcare VC Partners!

So, a lot of impressive speakers.  HBS really has the power to draw in some amazing people when it comes to these sort of things.  All-in-all, I think I learned a lot, but it does make me realize how much I love the case method.  It’s much more difficult to pay attention for 90-minutes when it’s just one guy talking, no matter how interesting he is.  Unless he’s flashing graphics-rich powerpoint slides 4x/minute in a multimedia presentation, it’s just too easy to let your mind wander.  My top 5 takeaways from the IXP:

1. Healthcare is complex.  Delivery is complex.  Diseases are complex.  There are few elegant or simple mechanisms here, and it’s definitely a quagmire.
2. Hostility towards business, profits, and competition is unusually high, from almost ALL of the players.  Huge (and highly explanatory) implications here.
3. Untapped potential for economies of scale are HUGE!  Metrics clearly show that specialized centers with high volume have far better outcomes, but still, even the leading centers only serve <1% of the US market.
4. Risk tolerance is virtually nil, and has been declining for years.  Many of the key discoveries which have saved many lives wouldn’t have taken place in today’s environment.
5. Average industry profitability for Pharma. is 10-15% and has been declining rapidly over the years (as is inevitable as industries mature).  It takes 12-15 yrs from patent to market & the FDA success rate is only 11%.

As a side note, it was also interesting to hear the panel of VCs talk about the challenge of presenting the VC-industry in a good light.  As their “10 year results” window moves past the biotech boom in 1999, their returns are going to be negative!  Shocking and disappointing… so much for becoming a VC!

While I tend to be a bit more sympathetic towards stem cell “legalization”, I can understand the other side’s position.  I don’t think most advocates do.  The pro-argument tends to go: The embryos created for IVF are going to be destroyed anyway, so why not use them for research?  To understand what the opposition believes, you need to replace the word “embryo” with “baby” and restate the argument.  Opponents of embryonic stem cell research seem to believe two things:

1. In-vitro Fertilization (IVF) results in the creation of 5-10 babies.  Parents choose to keep one and slaughter the other 4-9.  This is wrong.
2. Allowing research on the babies instead of simply killing them takes advantage of an abhorrent practice.

If you look at it that way, it’s easier to understand the opposition.  I don’t necessarily agree with this position, but I can understand that it’s a non-negotiable issue if you feel this way.

What I found more interesting from the whole stem cell discussion was that it didn’t seem to touch on the root cause of this problem: using the NIH for capital allocation.  Let’s think for a second about how this mechanism works:

1. Gov’t collects $$$ from researchers.
2. These taxes fund the NIH.
3. The NIH decides (politically) how to reallocate the $$$.
4. Researchers complain about the allocation being political.

It seems like this whole stem-cell debate is a perfect opportunity to question the basic premise: why are we pushing these funds through a political machine instead of simply allowing each individual / company to use them as they see fit?  Politically-motivated decisions are the only reason you would do so.  If you want “the scientists” to decide instead of “the politicians” there’s no reason to push the funds through the NIH.

Do people honestly think that a handful of professional politicians can allocate funds more effectively than tens of thousands of scientists?  Either way you feel about the stem cell issue, it seems like it would lead you to the same conclusion: Get the government out of scientific research funding.