The big bang is coming in health care, and it will spark the next industrial revolution

  • Health care was one of the top sectors in 2017 investment inflows, at $4 billion, outpaced only by the internet, at $6.5 billion.
  • The cost of sequencing a genome is under $1,000, down from $2 billion less than two decades ago; 1 billion people will soon supply the world's databases with their genomic and phenotypic information.
  • 46 new products were approved in 2017, double the number 10 years ago.
  • Fred Hassan is an advisory board member for Healthy Returns, CNBC's new health-care innovation conference, on March 28, 2018, in New York City.
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This year's emergence of breakthrough innovations illustrates the vitality of the health care industry. And biopharma is largely what's underpinning this paradigm shift in the global health-care ecosystem.

The biopharma innovation flow in 2017 was the most exciting the world has seen. New modes of action emerged, and in quantity. These included cell therapy using energized T-cells to go out as foot soldiers to find and hunt down cancer cells. Gene therapy came upon the scene, this time to fix a specific gene defect in the retina of the eye.

In the recent PWC Money Tree report on venture capital money flow in 2017, the top sectors in 2017 investment inflows were the internet, which got the most investor money ($6.5 billion), followed by health care ($4 billion). These two sectors were ahead of mobile and telecommunications and software (non-internet and mobile). While internet is part of an industrial revolution, health care has been waiting for its turn.

Innovations creating magic — past and present

Industrial revolutions occur when there is an unmet need and when different technologies come together to create magic. New industrial revolutions begin even as previous industrial revolutions are continuing. They are not in series; they overlap, as in a Gantt chart.

The First Industrial Revolution, which spanned the second half of the 18th and the first half of the 19th centuries, occurred by the harnessing of energy (from coal and water power) to replace human or animal labor. These included innovations such as the steam engine and cotton-spinning machines. Because it was led by countries in the West, it set the stage for rising living standards in those countries.

The Second Industrial Revolution, in the second half of the 19th century and up until World War I was primarily powered by even "smarter power": electricity (e.g. telegraph) and hydrocarbons (e.g. internal combustion engine).

Just like electricity and petroleum followed coal and water power to become drivers of the Second Industrial Revolution, the Third Industrial Revolution, which began in the '80s, was driven by electronics, a "smart derivative" of electricity.

Electronics ushered in the personal computer, the internet, fast communication transmissions and lasers. Earlier, I stated that industrial revolutions overlap, as in a Gantt chart. This Third Revolution continues even as the Fourth Industrial Revolution has begun.

The Fourth Revolution is about networked power at a scale the world has never seen. More than 2 billion people in the world now carry a networked supercomputer (e.g.iPhone or other smartphone) in their pockets. Autonomous vehicles, big data, artificial intelligence are making our planet more instant and more tightly connected than ever before.

Just like the first two industrial revolutions drove people out of farms and into factories, there is now the angst of what happens to full employment if artificial intelligence displaces entire categories of workers. The common belief remains that humans will continue to adapt and prosper as we go through this Fourth Industrial Revolution.

Harnessing the power of the biological sciences

This brings me to the Fifth Industrial Revolution. The previous ones were all about the mechanical or physical sciences. The Fifth Industrial Revolution will be powered by the coming acceleration in harnessing the biological sciences.

Biology is difficult to characterize, difficult to chart on a systems basis. It is ever changing, difficult to intervene at specific intervention points and can take evasive action when human intervention occurs. Biology is ruled by nature, much more than the laws of physical science or mechanical science.

The stars are now aligning for the Fifth Industrial Revolution to start within the next decade. The need is clearly there. Just look at Alzheimer's. The world faces a tsunami as boomers start going past 80 in 1926 — only eight years from now. One in two beyond the age of 80 will get Alzheimer's. The cost of nursing-home care alone can bankrupt health-care systems. Fifteen years ago the beta amyloid thesis presented great hope. It is now coming under challenge as massive and expensive drug trials keep failing. Besides Alzheimer's, there are other diseases where the unmet need remains large.

In addition to the need, the convergence of technologies will power the coming Fifth Industrial Revolution.

Never before has it all come together in such a profound way. This includes the growing knowledge of disease cascades and intervention targets. It also includes the bubbling genomic science and data science. The research institutes around the globe, whether they be the NIH or Max Planck — are building on each other's findings and accumulated knowledge — all at an exponential pace.

"We will succeed in taming biology and making it into a more predictable science that can be harnessed, similar to the way the previous four industrial revolutions harnessed the physical and mechanical sciences."

Some say as much new research is getting added on in the previous two years as the entire period before that. The cost of sequencing a genome has dropped below $1,000, a stunning drop from $2 billion level less than two decades ago. This cost will keep dropping. It is estimated that more than a billion people will soon supply the world's databases with their genomic and phenotypic information to carry out correlations that educate us about gene variants and their linkage to diseases — and even lifestyles. Artificial intelligence will aggregate learnings to rapidly help find druggable protein targets at a pace never seen before.

The European Medicines Agency was rapidly emerging as a science-driven regulatory body that, along with the FDA, was the world's authority in assessing and approving innovation. Now, with Brexit causing confusion to the London-based EMA, the FDA has again emerged preeminent, like it was before the EMA was founded 23 years ago. Fortunately, the FDA is showing its determination to modernize and change. In 2017 we saw 46 new product approvals, about double the pace 10 years earlier.

Already, every 10 years, we are adding about two years to wellness and longevity. That will get even better. For example, we may find very early biomarkers, maybe 15 years earlier, to identify people at risk for Alzheimer's so they can take proactive measures. These biomarkers could be sophisticated PET scans or new approaches, such as using A.I. technology. Once the condition becomes predictable at an early stage, approaches could be deployed to prevent or mitigate the inflammatory cascade that is associated with Alzheimer's.

This Fifth Revolution, which I predict will start in the next decade, will make this century the Life Sciences Century for Mankind. We will succeed in taming biology and making it into a more predictable science that can be harnessed, similar to the way the previous four industrial revolutions harnessed the physical and mechanical sciences.

As the Fifth Industrial revolution unfolds, the pace of human development will accelerate. More and more of us will be living longer and living better.

We have a lot to look forward to in the decades ahead.

Commentary by Fred Hassan, chairman of Caret Group and an advisory board member for Healthy Returns, CNBC's new health-care innovation conference that will take place on March 28, 2018, in New York City.

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