In a recent ION Influencers Fireside Chat, Edward de Nor, Partner, and Mike Mortimer, Founding Partner at GHO Capital, provided valuable insights into the healthcare investment landscape, emphasizing the importance of specialization, strategic deal sourcing, and operational excellence. Their discussion highlighted GHO Capital’s approach to navigating market trends and driving growth in the healthcare sector.

About Mike Mortimer:

• Former executive at Pintas, Icuvia.
• Co-founded GHO Capital with Alan McKay and Andrea Ponte.
• Experience in developing and commercializing new molecular entities globally.

Edward de Nor:

• Background in engineering and physics.
• Transitioned to professional investing after Business School.
• Specialized in healthcare with extensive experience in private equity.

Key Topics Discussed

Specialization in Healthcare

• Importance of Domain Expertise: Specialization leads to better outcomes in technically complex businesses.
• Sub-Sectors: Healthcare is divided into winners and losers, with certain sub-sectors growing faster than others.

Five Key Sub-Sectors

1. Biopharma: Focus on contract service organizations providing scientific and manufacturing expertise.
2. Medtech: Similar focus as biopharma, including commercialization and research services.
3. Advisory and Data: Tech-enabled businesses aiding pharma and medtech companies in navigating regulatory frameworks and market strategies.
4. Life Science Tools and Diagnostics: Tools for diagnostic tests and R&D, crucial for drug development and manufacturing.
5. Health Tech: Software technologies enhancing lab operations, manufacturing plants, and supply chains.

Investment Strategy

• Avoiding Product and Payer Risk: Investing in “picks and shovel” businesses that provide essential services regardless of drug success.
• Regulatory Environment: Navigating regulatory frameworks effectively, with a focus on the FDA’s role in enabling sector growth.

Deal Sourcing and Ecosystem

• Proprietary Deals: 80% of deals are sourced bilaterally, leveraging sector expertise and international capabilities.
• Ecosystem: Collaboration with subject matter experts and founder-led businesses to drive growth and innovation.

Operational Improvement

• Team Building: Assessing and expanding management teams to ensure sustainable growth.
• Sales Optimization: Building robust sales functions and leveraging advisory groups for continuous improvement.
• Financial Structuring: Transitioning founder-led businesses to more mature operations.

Technology and Innovation

• Fast Follower Strategy: Investing in promising technologies after initial venture capital backing.
• Operational Excellence: Utilizing technology as a tool for enabling better scientific and commercial outcomes.

Market Trends and Future Outlook

• Macroeconomic Concerns: Addressing uncertainties in the market while maintaining a long-term positive outlook.
• Sector Specialization: Increasing specialization among secondary players, validating the market opportunity.
• Exit Strategies: Cautious optimism for exits in 2025, with strong positioning for 2026.

Key timestamps:

00:07 Introduction to the Fireside Chat
02:11 Market Trends in Healthcare Investment
03:15 Identifying Winners and Losers in Healthcare
04:22 Exploring Key Subsector Focus Areas
05:27 Deep Dive into the Five Subsectors
08:36 Understanding Reimbursement Risks
11:26 Sourcing Proprietary Deals in Healthcare
12:57 The Evolving Ecosystem of Healthcare Investment
16:06 The Role of Private Credit in Healthcare Financing
17:01 Evaluating Technology Readiness for Investment
18:56 Operational Improvements for Portfolio Companies
21:27 Facilitating Connections in Biopharma
22:17 Engagement with Portfolio Companies
23:05 Leveraging Expertise and Networks
25:28 Impact of Investments on Healthcare
26:35 Market Specialization Trends
27:58 Exit Strategies and Market Predictions
29:02 Diverse Deal Flow Across Sectors
30:04 Shifts in Drug Development Investment