Accelerating Medical Solutions

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Accelerating Medical Solutions Accelerating Medical Solutions Personalized Medicine Conference Boston | November 6, 2013 “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us …” We are entering a new “Golden Age of Medicine.” Precision Medicine, Immunology, Stem Cells… Change in Biomedical Research Spending (2012) 20% China India 15% Brazil Korea Japan 10% Germany 5% Australia UK 0% France -5% US Canada -10% Source: OECD – Government Budget Appropriations or Outlays for Research and Development (2012) Accelerating Medical Solutions Overview The Interaction of Financial, Social and Human Capital … and Technology The Promise of Bioscience and Public Health Where We Have Come From Berkeley 1964 Los Angeles Under Siege P=SFti*(SHCi+SSCi+SRAi) P = Prosperity Ft = Financial Technology HC = Human Capital SC = Social Capital RA = Real Assets Examples of Social Capital Universal suffrage Rule of law Education and health care Police and fire protection Religious freedom Cultural resources Property rights Protection of creditors Financial reporting standards Human capital is the largest asset class. Cost of Raw Materials & Energy 1920’s Today’s Automobile Microchip 60% <2% Three Ways to Build Human Capital Education and skills Immigration Health and quality of life The Value of Health Each life is priceless… but in economic terms, over the past two centuries, as much as 50% of all economic growth can be traced to advances in health. Life Expectancy in East Asia 80 60 40 20 0 1955-1960 2011 Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects: The 2010 Revision, CD-ROM Edition World’s Fastest Growing Economies Annual Average GDP Growth Angola 11.1% Iraq 8.6% China 10.5% China 8.4% Myanmar 10.3% Ghana 8.4% Nigeria 8.9% Mozambique 7.8% 2010 Ethiopia 8.4% 2015 Zambia 7.6% - - Kazakhstan 8.2% Rwanda 7.6% Chad 7.9% Uzbekistan 7.2% 2001 2011 Mozambique 7.9% Congo, D.R. 7.1% Cambodia 7.7% Nigeria 7.0% Rwanda 7.6% Cambodia 7.0% Source: The Economist; IMF (excludes countries with populations<10 million) Do human capital strategies work? Per Capita GDP Singapore 1960 2012 $2,271 $49,936 Jamaica $2,255 $5,526 Source: International Monetary Fund (2011 USD) Accelerating Medical Solutions Overview The Intersection of Financial, Social and Human Capital … and Technology The Promise of Bioscience and Public Health Where We Have Come From Between 1870 and 1950, Americans added almost ONE YEAR OF EDUCATION EACH DECADE. By 1960, the highest average grade level in the U.S. EXCEEDED EVERY OTHER NATION BY TWO YEARS. Since 1960, we have made no progress and several OTHER NATIONS HAVE SURPASSED US. Source: Claudia Goldin and Lawrence Katz / The Race between Education and Technology “I believe we can keep the promise of our founding — the idea that if you’re willing to work hard … you can make it here in America.” - Reelection Night Source: New York Times 11/7/12 Skilled and Unskilled Jobs in the U.S. 1950 Today 65% 60% 20% 20% 20% 15% Unskilled Semi-skilled Skilled Unskilled Semi-skilled Skilled Return on Human Capital Investment Preschool Programs Return School Job Training Age Source: James Heckman, University of Chicago Share of Government Spending on Education Early Childhood Middle Late USA Greece Mexico Australia Germany United Kingdom France Finland 0% 20% 40% 60% 80% 100% Source: OECD Social Capital 60% of Chinese people with assets over $1.6 million are thinking about emigrating to the U.S. or Europe. Source: U.S. Department of Homeland Security (WSJ 2/22/12 “Plan B for China’s Wealthy: Moving to the U.S./Europe) World University Ranking Life Sciences and Medicine 1. Harvard University 11. Imperial College London 2. University of Cambridge 12. UC San Diego 3. University of Oxford 13. National University/Singapore 4. Stanford University 14. University of Melbourne 5. Berkeley 15. University College London 6. University of Tokyo 16. University of Toronto 7. Johns Hopkins University 17. University of Edinburgh 8. MIT 18. Kyoto University 9. Yale University 19. University of Sydney 10. UCLA 20. University of British Columbia 329 Scholars since 1989 87 born outside the U.S. 39 countries of origin 245 Scholars have parent(s) born outside the U.S. 106 colleges attended 58 are married 72 children of Milken Scholars 64 Harvard 37 Stanford 28 Yale 24 Berkeley 17 Penn 15 Columbia 14 MIT 10 Princeton 9 Brown 5 Cornell Immigrants in Silicon Valley More than half of Silicon Valley’s science and engineering workforce is foreign-born. More than 15% of Silicon Valley start-up companies were founded by immigrants from India. Another 13% have CEOs from China or Taiwan. Sources: Vivek Wadhwa, Duke University Patents Foreign-born scientists in the U.S. are listed among the inventors on… • More than five out of six information-technology patents • Almost eight out of 10 pharmaceutical drug patents • Three out of four patents in molecular biology and microbiology. Sources: Partnership for a New American Economy 1900: Countries More Than 50% Urban > 50% < 50% 2000: Countries More Than 50% Urban > 50% < 50% U.S., Japan, and E.U. Make Up More Than 60% of the World’s Real GDP (GDP in constant 2005 US$) 100% 80% United States 60% Japan 40% European Union Other 20% 0% Sources: World Bank. 34 Emerging Market vs. Developing Economies Share of world GDP (%), based on purchasing-power-parity (PPP) 65 60 Developed Economies 55 50 45 40 Developing 35 Economies 30 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: International Monetary Fund. Increase in U.S. Corporate Cash Balances $ billions 145 145 125 2007 Q2 2013 105 85 68 65 56 46 45 34 34 23 22 25 21 25 15 15 18 7 8 8 5 -15 Apple Microsoft Google Cisco Oracle Pfizer Chevron Merck +840% +192% +267% +108% +380% +32% +158% +120 Source: Bloomberg. Data are for cash and marketable securities Increase in Corporate Cash Balances 2005 to 2013 Cash holdings of publicly listed companies, percent of GDP 40% 40% 37% Q1 2013 2005 30% 24% 23% 23% 20% 17% 14% 12% 10% 10% 8% 9% 9% 9% 8% 6% 7% 6% 6% 7% 4% 3% 1% 0% China U.K. $747 Japan France Spain S.Korea U.S. $826 Brazil Italy Russia Germany $3,051 $618 $437 $266 $107 $205 $127 $171 $95 Source: Bloomberg and International Monetary Fund. Note: Includes cash and near cash items. Japanese Companies’ Cash Stockpiles Billion USD 40 35 30 25 2013 20 15 10 5 2007 0 Toyota Softbank Rakuten Sony Mitsubishi Mitsui Honda Motor Source: Bloomberg. Japanese Corporate Cash Larger Than Spain’s GDP Billion USD 2,500 2,000 1,500 1,000 500 0 Japan corporate cash U.S. corporate cash Spain GDP Source: Bloomberg, World Bank. Note: Corporate cash includes cash & deposits for nonfinancial private companies. Largest Sovereign Wealth Funds By Country (US$ Billions) China $1,300 Norway $810 United Emirates – Abu Dhabi $800 Saudi Arabia $700 Singapore $458 Kuwait $386 China - Hong Kong $327 Russia $189 Others $946 Source: SWF Institute, August 2013. Equity market capitalization: 2009 to present Country 3/1/2009 10/30/2013 Increase U.S. (S&P 500) $6.3 T $16.2 T 156% U.K. (FTSE 100) $1.3 T $3.0 T 138% Japan (Nikkei 225) $1.6T $2.9T 79% Germany (DAX) $558 B $1.2 T 121% Mexico (Bolsa IPC) $108 B $353 B 228% Source: Bloomberg. The Nature of Credit 1. Credit is what counts, not leverage. 2. Most loans to real estate are not investment-grade. 3. Interest rates are volatile and unpredictable. 4. Credit research is more than ratings. 5. Sovereign debt is historically risky. 6. Debt values underpin all capital markets Federal Spending Priorities Annual, in $ billions $300 Housing Subsidies $200 (forgone tax revenue) $100 Education NIH FDA CDC $0 Sources: FDA, CDC, NIH, OMB, Pew Charitable Trusts. Education reflects OMB category “Education, Training, Employment, and Social Services” function. Housing subsidies reflect estimated forgone tax revenues from deductions for imputed rent, mortgage interest and property taxes. All data 2012 except housing, which is estimated for 2010. Mortgages Guaranteed by the Government $4T 90% $13B 7% 1980 2013 Source: U.S. Census Bureau New Mortgages Backed by FHA (billions) $400 $300 $200 $100 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Inside Mortgage Finance Change in U.S. Home Ownership 65.6% 65.4% 1980 2013 Source: U.S. Census Bureau Current Home Ownership Rates 70% 65% 60% 55% 50% 45% Canada UK Denmark U.S. France Japan Germany Sources: EuroStat, U.S. Census Bureau, AEI, Milken Institute. Home prices don’t go up forever Change in home prices in 122 years 30% Great 70’s 80’s Latest WWI Depression WWII Boom Boom Boom 20% 10% 0% -10% -20% 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Sources: Robert Shiller, Milken Institute / 8-15-13. Transaction Cost Comparison 400 shares of AAPL Residential Mortgage Value = $212,000 Value = $212,000 Cost to sell = $9.99 Cost to sell = >$20,000 Date: 10/24/13 Wealth Patterns in Selected Countries 2013 wealth per adult in 1,000 U.S. dollars (rounded) Country Average Median <$10K >$1M Australia $403 $219 6.9% 6.8% France $296 $142 21.7% 4.6% Greece $103 $54 20.4% 0.8% Italy $241 $139 20.0% 3.0% Japan $217 $110 9.2% 2.5% United Kingdom $244 $112 18.0% 3.2% United States $301 $45 30.7% 5.5% Source: Global Wealth Databook 2013, Credit Suisse Wealth Patterns in Selected Countries 2013 wealth per adult in 1,000 U.S.
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