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Healthcare Weekly: ALGN, MCK, ILMN, ZTS and Diagnostics for Doggos

Alyees Qureshi | September 16, 2022

I’ve had a cold all week. So I’m sure you’re thinking, shouldn’t telehealth have cured me by now? Especially since I’m always writing about it with so much elegance, intelligence, and panache. Well you’re right! But I’ve yet to subscribe to a telehealth provider because I’m waiting to see which one of these giant companies wins out in the sector. I’ve had all week to recharge brainpower and bring you another killer analysis of expert call transcripts in healthcare, which you can keep up with by subscribing to a free trial of Stream.

This week continues the trend of Align Technology (ALGN), CVS Health Corp (CVS), and Illumina Inc (ILMN) in the top expert call transcripts. We also see new developments in the threat to McKesson Corp (MCK) from AMZN and the opportunity for Zoetis (ZTS) to challenge IDXX (IDEXX) in the animal health diagnostics market.

Below you’ll find the top expert call transcripts published Sept 1-9 2022 on Stream in Pharmaceuticals, Biotechnology & Life Sciences (PBLS) and Health Care Equipment & Services. We’ve determined this list by highest total engagement. Take a sneak peek below at what’s trending at Stream and sign up for a free 14-day trial for the full scoop.

Top Ten Expert Call Transcripts: Pharmaceuticals, Biotechnology & Life Sciences

  1. ILMN (Illumina Inc): Competitor CSO Believes ILMN Will Remain Dominant in NGS
  2. TMO (Thermo Fisher Scientific Inc): Former Associate Director Thinks That Supply Chain Reliability Is an Important Criteria for Customers
  3. ZTS (Zoetis Inc): Former Sr. Director Is Bullish on Companion Animal Product Innovations at ZTS 
  4. JNJ (Johnson & Johnson): Former DePuy Synthes VP Believes JNJ’s Ortho Robot Is Well Positioned
  5. DHR (Danaher Corp): Former Nobel Biocare Territory Manager Believes the Economy Will Be a Headwind for the Dental Implant Industry
  6. DHR (Danaher Corp): Former Manager Thinks DHR Prioritizes Financial Returns Over Investment in Innovation
  7. BMY (Bristol-Myers Squibb Co): Former Associate Director Believes That Humira Biosimilars Could Steal Market Share From ZEPOSIA’s in Ulcerative Colitis
  8. TMO (Thermo Fisher Scientific Inc): Former Director Thinks Supply Chain Challenges Could Start to Subside Next Year
  9. TMO (Thermo Fisher Scientific Inc): Customer Thinks TMO and Cytiva Might Be Complacent
  10. AMGN (Amgen Inc): Former Sr. Sales Representative Is Bearish About Repatha’s Growth Potential

The Co-Founder of Polaris Genomics thinks that long-read genome sequencing has accuracy and scalability challenges that limit adoption and will only have limited applications. However, ILMN will increase share in the next-generation sequencing space. Read more about ILMN’s increasing focus in the long-read genome sequencing market.

You have to credit [ILMN’s] team and their leadership that they’ve had there at the company even since its inception and to now, strong, very technically proficient scientific leadership at that company that has really taken sequencing to scale. Many of their products are based on different platforms that could scale. The sequencing by synthesis method scales very well once you have the computational power to back it.

Some key acquisitions they made like Edico for the DRAGEN chip that allowed for more rapid computation of the biopharmatic data once it came off their sequencers. I think it was a big advance for them because the biggest challenge in sequencing, particularly when you’re doing alignment-base like sequencing by synthesis, is integrating the data following the sequencing run. That piece..has helped them retain some level of market leadership in the field.

Co-Founder and Chief Scientific Officer, [Competitor] (Current)

However, long-read technology won’t be replacing short-read genome sequencing any time soon. ILMN could have offered a mixed sequencing approach through their attempted acquisition of PacBio which was unsuccessful.

I don’t see long-read technology overtaking short-read technology anytime soon, just because short-read is massively scalable. The bottleneck on the short-read is the computation. Once you have all of the reads aligning and doing that, as we get faster and faster compute power, more things like AI and machine learning being able to be unleashed on it, I think short-read is…going to be here for a while.

Now, you can envision some instances of blended versions of this where you have a long-read followed by a short-read to try to improve the accuracy. Again, I think that was probably what was envisioned as Illumina attempted to acquire PacBio, but that acquisition didn’t go through a few years ago. Had they really been able to do that, there may have been some opportunity to mix and blend these fields. I also noticed that companies like PacBio are starting to try to offer the short-read like offerings. I don’t think that long-read will ever overtake short-read.”

Co-Founder and Chief Scientific Officer, [Competitor] (Current)

But enough about human health, let’s talk about animal healthcare. The former Senior Director at Zoetis is bullish on its innovations of companion animal products and sees diagnostics as the next place to invest. Read more about the battlefield between ZTS and IDXX in our August Healthcare Monthly.

IDEXX is the gorilla and the big share of the market. Zoetis sees a lot of expansion potential into diagnostics, rightfully so because a big part of the market is controlled by IDEXX. It’s not an easy, I would say, game but the relationship that Zoetis has with that clinic, there’s potential for a gain there, that’s for sure.

You bring things that offer convenience, that is, at least as good as IDEXX to get a share, or you bring things that are simpler, better diagnostic way, or simpler ways to get a diagnostic. Absolutely. Diagnostics in general in animal health has evolved a lot in the last 20 years, and I believe it will continue to evolve significantly in the next 20 years, or in the next 10 years.

If you’re a player in that segment, you have to be in diagnostics, and you have to invest wise-fully. I think they have the tools to be successful but it’s not an easy game when you have one company that controls so much market share already in the segment. You can definitely gain, but it will take time…

Senior Director, Zoetis (Prior)

Top Ten Expert Call Transcripts: Health Care Equipment & Services

  1. ALGN (Align Technology Inc): Partner Believes the Aligner Market Will Grow but ALGN Will Lose Significant Share
  2. MCK (McKesson Corp): Former Director Thinks AMZN Is a Competitive Threat for Distributors
  3. MDT (Medtronic PLC): Competitor Thinks People Keep Rolling off MDT Making Opportunity for AXNX Valencia Technologies 
  4. CVS (CVS Health Corp): Former Sr. Director is Bullish That CVS has a Powerful Healthcare Strategy
  5. CVS (CVS Health Corp): Former Senior Manager Believes There Could Be Efficiencies in Future Pandemics With Pharmacy Chains Incorporating Medical Services to Add to Revenue Streams
  6. ISRG (Intuitive Surgical Inc): Former Electrical Engineer Does Not Think ISRG Will See Strong Competition From JNJ
  7. ELV (Elevance Health Inc): Former Competitor Believes That ELV Has Positioned Itself for Growth in Value-Based Healthcare
  8. HCA (HCA Healthcare Inc): Former Assistant Vice President Thinks Foreign Telehealth Cannot Succeed in the US Due to Regulatory and Data Storage Challenges
  9. CVS (CVS Health Corp): Former Sr. Manager Thinks Private Label Is a Differentiator for CVS
  10. UNH (Unitedhealth Group Inc): Nurse Practitioner Thinks Optum Needs to Reform Its Post-Acute Care Strategy

A former Vice President at Aspen Dental believes the clear aligner market will grow but ALGN will lose significant share due to their stubbornness on high prices. This aligns with my bearish view of ALGN’s position in the market as competitors like 3M have begun to offer comparable products for a lower price. It’s going to be difficult for ALGN to maintain their position in the aligner market as more orthodontists become aware of cheaper alternatives, with some even claiming that 3M products are 100% substitutes. The question now on my mind: when will the patients realize there are cheaper alternatives? Potentially soon as the product gap of clear aligners closes and orthodontists experience the binding effect of ALGN’s iTero scanners.

You see this significant shift away from brackets and wires to clear aligners, which will definitely help Align. At the same time, while the category is growing very rapidly, Align’s market share is falling pretty significantly because you’re getting new players in the market.

You have the SureSmile product from Dentsply Sirona. Byte is another clear aligner. You have a whole bunch of other players. I think investors are getting into it. You have all these other players that are eroding shares from Align.

While the category is growing very rapidly, I think Align’s struggles is despite a rapidly growing category, you have pretty significant declines in market share, which is representative of the fact that they are able, they just haven’t really been willing to budge on price…. Align isn’t going to go out of business or anything like that because, again, the category is just growing so rapidly. I think there’s still opportunity for growth.

If they continue to erode share, that’s going to cause significant problems for them. I think that’s where you’re starting to see that reflected in their share price over the last year or so.

Vice President, Aspen Dental (Prior)

A former Director at MCK thinks that AMZN is a huge threat for distributors, especially MCK. AMZN is now able to cut out the middleman after its acquisition of PillPack.

Now that Amazon is full-on in the pharmaceutical space, they’re operating a pharmacy, I see them as being a huge threat, not only more specifically to retailers, but also because right now, McKesson’s business is tied to those retail accounts, I see them being a threat to McKesson as well.

They have the opportunity to disintermediate the large distribution houses like McKesson. As big drums of thousands of pills can go to an Amazon facility to be sorted and packed using the PillPack technology that they acquired, they wouldn’t need to go through a McKesson warehouse. I see that as a big threat. The only thing that would mitigate that threat, I think, is Amazon’s decision-making. If they put the money and the effort behind it, I think they could be a huge problem for McKesson.

Business Director, McKesson (Prior)

A former CVS Senior Director is bullish on the company’s healthcare strategy. CVS does have the potential to beat out AMZN as the leader in telehealth with a technological overhaul, but AMZN has already moved into the space with full force. Read more at Stream about CVS’ bid on SGFY here.

“For CVS, the way to combat that is to build out your channel. You can direct the care to the extent that you can drive this with the insurance company so you can set the market. I think that’s what CVS is doing. I’d say Amazon’s probably five to 10 years behind but they can catch up. They have the funds. They have the capability to catch up

I think CVS probably has a better chance on the digitalization component because they have access to all these other patients. If you’re already connecting with them, engaging with them, maybe it’s not on healthcare but you’ve got front store and healthcare. Some are doing both. You have a whole set of people that you can bring products to from a digital perspective and start taking share as well. I think that’s their asset that they have that [UNH’s] Optum doesn’t.

I think Amazon has something similar. They have a digital connection with 100 million people, but they don’t have a healthcare brand yet. Optum has the healthcare brand but they don’t have that digital connection. I think Optum might be ahead on the primary care front, but CVS and Amazon have these other digital connections that will enable growth that I would say [UNH’s] Optum has as a deficiency…

You have Amazon Care and it’s not really resonating. I think it comes back to the inverse of people going to CVS for healthcare. I think maybe Amazon Care really wasn’t that compelling of an offering. Maybe it just didn’t have the credibility.”

Senior Director, CVS Health (Prior)

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