Happy Thursday, everybody.
How’s everyone holding up? I hope you’re doing your part and staying home. While I haven’t left my apartment in Brooklyn since Saturday, I’m feeling more grateful than ever for technology. I’ve so far managed to keep a strangely social calendar involving virtual happy hours and workouts on Zoom with friends from my living room. On another bright note, I was finally able to snag a slot with Amazon’s Whole Foods delivery service and expect groceries at my front door any moment. It’s the little things …
In between calls this week with PE sources and advisers, who seem to slowly be moving from defensive mode, to offensive mode — more on that later — I decided to set out to see if any lessons can be learned from healthcare investors in Asia.
While the covid-19 curve is only worsening across the U.S., Asia finally appears to be coming out from underneath it. In some good news, China in recent days reportedly began seeing a drop in new daily coronavirus cases.
Dr. Amit Varma, managing partner and founder of Quadria Capital — which owns 18 healthcare companies across the Asia-Pacific region — told me this week that based on his firm’s experience and his own observations, the biggest disruption likely to challenge the U.S. healthcare PE community and their companies: supply chain issues.
Varma said the widespread supply chain disruption, emerging as companies run out of medical supplies and face difficulties transporting products and equipment, will trigger change across global healthcare systems in the aftermath of this all.
“You’re going to see healthcare companies prioritize their own citizens for things like medical equipment. Localization of supply is actually going to become a big investment theme across the globe,” he told me.
One obvious example right now is medical masks. These were the least common denominator of products before the covid-19 crisis, Varma said. (Please, if you’re healthy and hoarding a bunch, don’t. A number of grassroots efforts have been set up to facilitate donations for doctors who need them. Here’s one way to donate to NYC hospitals.)
Varma also spoke to his frustrations. As a physician for almost 40 years, Varma said he’s seen many different public health mechanisms across different countries and remains frustrated by the lack of public-private collaboration and seriousness that most countries have demonstrated on this front.
The investor said that although he can understand the government’s inability to dedicate enough money in regions like Asia and Indonesia – because there are other needs – change needs to happen regardless:
“This is time to signify the public-private partnership.”
In the U.S., it’s nice we are seeing some collaboration on this front in an effort to get ahead of oncoming supply chain challenges.
Last week, the U.S. Department of Health and Human Services announced it had launched a public-private partnership to create U.S.-based, high-speed emergency drug packaging solutions. Yesterday, Jefferies revealed that it would be the first private-sector entity to join the initiative to raise up to $1 billion in private capital.
The new network is called Rapid Aseptic Packaging of Injectable Drugs, or RAPID. The effort is focused on enabling the Strategic National Stockpile to rapidly administer hundreds of millions of prefilled syringes, with the goal of responding quickly and efficiently to covid-19 needs when vaccines and drugs become available.
“[In] our minds, healthcare is now at the forefront of everyone’s minds,” Varma said. “People like us have been screaming from the rooftop [that more funding is needed]. Unfortunately it’s taken a crisis to prove it.”
Stay tuned for my full interview with Varma.
Joining the war against coronavirus: As the U.S. public and private sectors join forces, we’re also seeing PE firms repurposing resources in their own portfolios to curb the public health crisis. Adjuvant Capital and ArchiMed are a couple of them.
“Rather than be reactive in going out there to hunt for coronavirus-related investment opportunities, we instead looked at [our] existing companies,” said Glenn Rockman, founder and managing partner of Adjuvant. Read more.
Pulled auctions: Although there are exceptions, it seems that just about every company headed to the auction block or mid-process is either delayed or shut down indefinitely in the wake of market volatility stemming from coronavirus-related fears. One of those is Thoma Bravo’s Imprivata, which helps healthcare providers protect patient information, I learned. Check out my story.
That’s it for today’s rundown. As always, reach me at email@example.com with your comments, tips or just to say hello.