 So good afternoon everyone. Thanks for coming to listen to our fireside chat I just want to introduce everyone I have on stage with me before we get started to my left is David from Baxter International We have Elena opposite me and Lou to the right So guys, I'd like to start by talking a little bit about innovation and regulation and Why it's so difficult to innovate and disrupt in health compared to other industries. So if Elena I could ask you first Health is a very complicated industry much more so than for example consumer electronics What exactly makes it so complicated? Well, I think it's as soon as you deal with people's lives as well as their money Then you have to kind of have regulations in place to protect People's lives or money and when it comes to health that is extremely important You cannot just you know be careless when it comes to health Because you have to make sure that you know There's Process in place etc. And that's where regulations come into play. So Regulations are extremely important in order to make sure that Innovation happens in a certain way etc But I think the problem comes when you know innovation happens much faster than you have time to update the Regulations and then regulations do not only protect people but also inhibits innovation Absolutely, what what do you feel we lose out on as a result of the system being as it is? Well, I feel like it becomes kind of a culture in the health space where You know, there's a lot of skepticism against innovation and new things coming up and that's not good for the longer future Thanks Lou, what do you feel would be possible if disruption became as easy and perhaps as widespread in health care as it is in other industries? I would say first that the struggle is being never easy in any industry So but it's true that it's harder in the health care industry because of the regulation because of cost of the technology and the implement and Integration but I feel if it could be easier especially for the capital more founder came into the sage Will for sure seem more like a unicorn company in this industry We'll see more like a company IPO rather than directly go with the much acquisition route Lots of founder decide to sell the company because it sounds a huge challenge that continue work on it with this regulated moderate Sure What do you think we can do to try and accelerate the change as well? I think first is for sure that for the whole ecosystem no matter it's a regulator Capital we could do a lot now. There's not many capital Prefer to invest in health care if we could have more capital more venture capitalists are trying to support a health care company For sure will help and also as far as I heard that the FDA in United States They're trying to a salary internally to better to help the founder and also some payer Ancient's company set up the venture arm to support the founder but meanwhile I feel on the other side There are lots of things founder could do to help or sell it in the process first is the attitude towards FDA I know lots of founder has very negative attitude towards FDA think that's my enemy But actually you could make them your friend if you treat them well if you want to make friend with someone You need to let them get to know you first You need to know what they want from you and prepare everything and the submit the application They could get approved very fast another thing is to impress the new technology now Just to stick with the conventional health care innovation, but to adopt a new technology AI Network security to really a salary team the innovation process So you're nodding a bit there David anything to add about the the FDA and regulation I mean, I couldn't agree more with with Lou's point that in anything your regulator has to be your friend too and The agencies are obviously there just put it put in the protections that that were discussed earlier But the reality is They're there to promote innovation the FDA actually has dramatically reduced approval timelines For both drugs and medical devices over the past five years in order to speed innovation They have designations like fast track for the way to get on a fast track is to work with them and To get to know the agency to a point where they can be an ally not an adversary Absolutely Something else I was keen to ask you is I know we've discussed it before that changes often the result of specific needs and Pain points and there's lots of pain points in this sector and there's a lot of money going into this sector as well so do you feel it's more a case of when not if and if so How long is it going to be before this happens? Yeah, it's a it's a great question John because you think about disruption I think it was in a in a in a previous session where disruption innovation is about Making things cheaper more efficient, etc. You look at any statistic and you would say health care is seen the exact opposite Everyone knows about ballooning health care costs around the world aging population Stretch government systems, etc. Etc. But there actually is a ton of innovation that takes place in health care I think the problem with it is that it's all seen beneath the surface So if ends up being very specific problems that end up treating a specific disease state rather than going after the broader system and I think the reason for that largely stems from a lack of Collaboration across all the different stakeholders one thing that didn't that that I think is important when you think about innovating in health care You probably have more stakeholders in health care than any other industry So you want to create a new consumer product all you have to do is create the product and sell it to one individual They take out a credit card or cash and they pay for it. That's it Transactions done in health care. First of all it varies in every single region So you can't talk about global health care without going into each of the individual countries You can't even talk about Western Europe each country has its own set of dynamics that that are important So think about think about an industry where you have a patient I in this case sometimes the consumer a caregiver a medical professional a payer a government Infrastructure like hospitals and other other systems like that that's a lot of mouths to feed But each one has its own objective and its own own set of incentives So I think one of the things that you're gonna see and you you're starting to actually observe this in the US is Changes in the overall environment that force these different participants to to to align around around incentives A lot of people talk about value-based care instead of volume Which is very simply get something out of what you're paying versus just do more of it So that that will force The right environment to drive innovation so I do to an answer your question simple I think it's a matter of yes when when not if but it's also Challenging to focus on all the different participants Sure Do you feel we can afford to wait for those changes do we need to try and accelerate them if possible? Yeah, it's It's also kind of like that that's the burning platform question at what point will a government just turn off the faucet And we actually saw that happen in Europe in in 2011 during the the the European death crisis where governments did literally just stop spending on health care and companies like ours Were we're forced to make decisions about continuing to provide care. We did It is a humanitarian need to provide health care. So that's never a question for us, but That did force a lot of European countries to rethink their incentive structure. So for example There's been a massive shift in Europe out of the hospital into the home Which is a much cheaper site of care and that happened through top-down regulation. So as a regulation change that will speed up innovation Yeah, absolutely I also wanted to touch on the kind of we have three different perspectives on the stage So you're coming from an investor side LNIC more from the startup side and David perhaps from a more corporate perspective I'd like to look a little bit at the the synergies between the three and how that can contribute to to positive change and speeding things up Louis if I could start by asking you as an investor you have kind of quite a lot of extensive knowledge in terms of what's taking place with Early stage health tech startups, and I know you worked with your own one before which was subsequently acquired Yeah, I wanted to ask if are there any emerging trends you can discuss or share with us in this space that you're aware of Sure, actually, you know, it just happened it seems late last year It's about like adopting the new technology into the we call the so-called conventional health care industry Now it's all based on the big ceases of personalization like a health care personalization medication That's a trend that's people are trying to do but now with the no matter like deep learning computer vision and network technology Make this become a reality. We could actually use love resist new technology to collect a tons of data from individual tons of data from a certain group and don't do the quick analysis get back to the patient and doctor and Provide personalized the diagnosis result our Treatment result for example like we always talk about computer vision like people think computer vision has security application This are that but actually computer vision is a perfect solution to solve the problem for medical imaging long times the problem for medical imaging is the overload of data and By using computer vision We're now trying to replace anyone like replace daughter No, it's trying to make their work more efficient to select maybe three out five of the image out from hundreds and Help the doctor to be more accurate and also repeatable. So that's the technology It's capable to do right now and also thought about like robotics We saw a robot for industrial application consumer facing but we could use robot for surgery as well Why we always want to have a senior doctor to do the operation because they have study hand But the machine and the robot could have study hand as well And also some technology could do the 3d live like an imaging of the operation So you can see the 3d dimension where's the distance between the knife and the heart That's all the things that being labeled by the new technology right now So what I thought is not only like the trend of the this two-sided work together. It's also actually occurred to me There's no there are so many new innovation center came out in the United States like in San Francisco in like a Chicago It's one as well like Pittsburgh Houston is because this type of innovation required two side of experts software hardware AI Computer science and also like a healthcare apps for when I was running my company like back in 2012 by 2011 it's a conventional hardware It's a piece of hardware collecting the bio sample But now lots of the new company I saw is they had the hardware still important as a big sensor Maybe portable device as a smaller sensor meanwhile pair with a layer of the network Transfer the data to the cloud and got the feedback right away So that's a definitely a very exciting new trend we're seeing happening in the early stage and another thing I really also appreciate a lot is the globalization of the healthcare innovation I I was born and raised in China went to second valley build up my career So by nature I I want to see like what's gonna happen in the future for technology from United States Also play the role across the world And now I saw the big trend is the founder start to realize the future competition will be globalized your biggest Competitor may outside United States meanwhile your biggest the market may outside United States as well So they also leverages advantages to actually Penetrating to new market faster take advantage of potential like a cheaper clinical trial and also get approval faster By leverage different resources. So that's another exciting trend. We were seeing happening for the past year Seems like there's certainly a lot of stuff happening Developments it literally happened for the past year when I was star when I first found this new-gen capital in Early 2015 it's so hard to find a co-investor for healthcare in the valley But all of a sudden in the late 2016 so many funds start to put capital into the Market because they saw the trends coming as well. So definitely very exciting exciting times. Yeah Elly not I'd really be interested in hearing your experience as a founder and running your own company It'd be really fascinating to hear how you found working in and disrupting the health industry Could you tell us a bit more about your experience there? Sure? Maybe not everyone knows what natural cycles is but it's The world's first certified contraceptive app. So what we do is we We have an algorithm that analyzes women's body temperature to detect ovulation and and pinpoint fertility and I Found it together with my husband and we're both physicists. I'm originally a particle physicist So as a researcher, I was maybe a little bit naive at first because I thought like okay I I will make this product that will do something good for the world and I we made clinical studies that show that The app is actually as effective as the pill. So I thought that's great life is good But I completely underestimated what a highly protected and regulated space. I was getting into and After launching the product in Sweden, we grew very fast the first year and then was when we Yeah, we got a lot of problems because we were then a medical device class one fertility monitor because After consulting with the medical product agency and and the notify body that audits you that's that's the answer We got that we should be but when people realize that actually Users use this app for contraception Then they thought but maybe then the risk class should be higher the same medical device risk class as the condom for Contraception so it took us then one and a half years of a lot of fighting and work and The hardest part was actually convincing the notify body to audit us at all for this high-risk class because they said but you're an app You know, you're not a condom a condom protects against STDs You don't so the biggest fight was to to be able to be considered for this high-risk class at all Which the medical product agency said that we had to be so the regulations weren't written for For an app so we had to kind of find our own way Which we finally managed to to get this certification in the beginning of the year which has been a huge milestone for us and our users and now we are trying to also befriend the FDA So we're getting to know each other So we're hoping to be able to again kind of create their own path with the FDA to get the similar Certification as we have in Europe, but it's not easy Definitely, it's like dating right? It's not easy I was also gonna ask that I guess founding a company is hard enough in itself How much of your time and energy did you feel that you spent on things like regulation? You would rather have spent on just building up your company and developing it a Lot of course luckily since we are to co-founders we can split our tasks a little bit my husband deals more with the regulations and I As a CTO I deal more with you know the technology and the product development But of course we spent so many weekends just like oh my god. They want something now We have to create some kind of report that looks good And do you do you see a future kind of Working with corporations for natural cycles or you're gonna focus more on developing things by yourselves working in the B2C space Well, I think since we're really on the forefront of this I Don't really see how we would work with corporations But I do think for the sake of you know new apps that are coming today that would want to be regulated I think like larger corporations like Apple or Google they could really you know Make a way for an app to go into regulation. So it's not just unknown terms And you have to make things up as they go We try now instead to You know work with for instance the NHS in the UK or insurances to see how we can actually get reimbursed Like other contraceptive methods are today, but also there. It's kind of like you know, we're an app But so we're not a medication. We never really fit in any of these boxes and a little bit of everything But not one particular thing. It's like trying to fit like a square into a hole or the opposite Yeah, you know, that's a part for challenging for FDA as well because what I heard is there's a company They also have a device and also app and then suddenly FDA FDA give back the feedback seeing that There's no data showing that patient won't get hurt by using the app. You need to provide data proving that So it's like they they they're now stupid It just just needs something to prevent if something happened in the future, but meanwhile, it sounds like stupid You need to prove that you won't got hurt by using the app. Yeah Yeah, you need to prove that it's not the problem for the eye to look yeah, yeah many things like that Sounds pretty complicated. I Wanted to ask David from a corporate perspective or someone who's perhaps really well versed in strategy and acquisition What your opinion is on most more surprising technologies that are coming forward or entering the health space as well Yeah, it's You know healthcare is it's just like it's an awesome space because It's one of the few spaces where you're actually you're dealing with with with people and you are impacting People's livelihoods. We have a pretty simple mission at Baxter that we really live by which is save and sustain lives and there's like no better feeling than when you go into a hospital and you see someone being treated and cured with with a product that that you've met that you've that you've manufactured and and brought to market so That is there's been a huge shift in the development of technology from just treatment of a specific condition to treating I think Lou talked a little bit almost out of the continuum of care new technologies that diagnose patients earlier that find a way to treat patients on an ongoing basis and try to prevent catastrophic event catastrophic Adverse events from taking place so and I'll give a couple specific examples and and this is my own personal Personal view, but there's there's some technologies now in the diabetes space for example called continuous glucose monitoring So patients who are diabetics need to test their blood sugar levels on a regular basis the problem with that is Obviously that your blood sugar changes in real time as you walk as you exercise as you eat as you go to slush after parties Etc. So you will what there's now technology that will not only monitor your glucose continuously But we'll connect to a phone it'll analyze trends in in the data and now analyze trends in the data It'll tell all of the relevant stakeholders when something has changed and not only when something has changed What to do about it? So think about if you're a parent you send your 14 year old off for summer summer holiday And you want it and they're diabetic you want to know everything that's happening with them But not only do you want to know everything what's happening with them You want to know what to do when you see blood sugar level spike So the intersection of health care and technology which I think Lou also kind of referenced about Machine learning AI etc. It's not so much about those technologies in and of themselves Because those are very sexy buzzwords that people like to use the reality is is how they're applied to unmet needs in health care And when you take you know, we you talk about working corporations and startups together We we are going to work with startups and innovative companies forever because we're realistic to know that we're not going to think of every Of every good idea that's relevant to the patient populations that we're trying to serve So we actively look for startups to partner with them because there is it there is a very specific Advantage that larger companies will always have which is distribution So when you're talking about interacting with regulatory bodies or government agencies or ministries of health that that's a skill muscle that Entrepreneurs are going to have a hard time developing and that's where a partnership becomes very very valuable potentially to Entrepreneurs and I've had the opportunity over the past year of being at being a backstreet me tons of interesting individuals developing companies and and and where it's a technology that quite frankly be super interesting to us But there there's sort of that barrier between Conception and commercialization and that's a bridge that we that we can help build help help cross and also one that We want to help cross even if it's something that isn't directly related to our business I spent a lot of time mentoring Entrepreneurs and start and individuals in the startup community just because we're all aiming at the same the the same objective And where there's an opportunity for for Baxter obviously to to be involved we certainly look for that as well, but There there's going to be a continued intersection of health care and technology for sure There there are two industries that I think you know everyone talks about disruption right just for people think disruption you think Displacing the reality is here the tech industry is not going to displace the health care industry It's just it's just not going to happen. So the but there's tremendous synergy in collaboration and finding common areas of Competencies where where the different stakeholders can can work together to advance a technology a therapy Cost situation, etc. I Have a ton more questions. I'd like to ask all three of you. I'm a tad conscious of time. We only have about five minutes left One thing I wanted to ask you Elena and then we'll jump to some audience questions Is what I find fascinating about natural cycles is you're using some quite straightforward data like your body temperature to give Incredible insight and really game-changing stuff Do you see that there are any other ways or ideas of how to use this data? That's so readily available to give the same kind of insight in different ways for health Yeah, I really think we'll see more and more of this I mean just from a woman's body temperature you can you can see so much I mean obviously when when she ovulates sometimes when she fertile and not but but also you can then see if She's likely to be less fertile in general and might need external help conceiving you can see if she has a thyroid problem it can Elevated temperature it can be a sign of Certain cancers if it's like a temporary infection in the body So they're infinite of possibilities and and I think what we all together should strive for is is really to get the complete understanding of our bodies on an individual level and only then can we take You know We can make better decisions and take preventive actions rather than the current system of detecting and treating already existing health issues and I think we're just seeing like The beginning of this and we'll discover more and more simple ways of measuring Simple data that can open up a whole world of possibilities. Absolutely. Yeah I'm gonna jump into a couple of audience questions now The first one is I'll read out the whole comments that I have a feeling that doctors I like the most risk and change of us people in the world So, how do you overcome their resistance for innovation? Maybe I could ask you Lou your thoughts on that So would you mind repeat again? Yeah, sorry, of course The comment is that the audience member feels that doctors are perhaps the most risk and change a verse people in the world And they'd like to know what ways we have of overcoming this resistance to innovation To work with some founder that are willing to take risk because like that's also what I saw that Lots of the doctor they have the professional background They also have a very good experience to see that the gap between the technology and also the how to really have the Application into the real operation, but meanwhile they always question all the new innovation because all the new things they're gonna have lots of things that still need to be improved and That's when we need some like some we call the outside Some outsider they're not within the health industry But they kind of could bring new insight and a new idea is to work with like to think about something Maybe impossible, but in the future could be achieved. Yeah, try to build up a team and and I think it's it's it's not an unfair Observation, but if you look at the most successful New ideas in health care. They're all founded by market research the same way every other Idea comes about is you know your customer, you know your channel and you know the audience that you're trying to tune You're trying to cater so when I meet the best startups that I meet are ones who have developed an idea by being in the field I mean I I've met a dozen companies here and the number of companies that have been out to meet customers and meet hospitals meet physicians is the vast minority of those companies and the reality is Those are the individuals who are going to be buying and using your product So you want them on board very early on and the medical medical community tends to actually move in in in large blocks So if you have the right physicians involved with developing a product and you can put it you put a brand name on it You will have you'll have a tremendous following. It's also Education right doctors are human beings and they they need to Practically medicine is a skill that requires repetition and training just like riding a bike or playing a sport And one of the biggest things we do is is training so if you think about and any time and in any situation is I don't think this is unique to health care, but The user of the product you're developing you want them involved from conception to purchase and as they're part of that You will learn how to develop a product that most aptly suits that that community And then you can tailor it along the way to well a doctor in the US will think differently about this than a doctor in China, but then you would go and localize it through through through on the ground primary primary activities sure Seven seconds left really quickly elena someone else mentions that regulation is crucial. How much did you feel this interferes with innovation? from a scale of one to ten Let's go from one to five. I Think it interferes maybe on level three and a half. So from one to five. So seven out of ten But when if you think the other way like actually once you got FDA, that's your differentiation That's good to have it FDA that once you got it other competitor They would take at least the two or three years to become your major competitor market. It's different from software I think that's a lot of software. They could copy you right away It becomes a stamp of approval in in a lot of ways. Yeah, it's a validation. Yeah, fantastic Well, Lou David's and I thank you very much for your time. I hope you enjoy the rest of flush And thank you everyone for listening to our talk Thanks, Sean. Thank you