The Game-Changing Women of Healthcare | S3 E3 | Natalie Douglas | Inventing, Investing, Advising

Thank you very much for that amazing introduction. It's great to be here.

Oh my goodness, it was an amazing journey. When I look back on it and think about the achievement, when I was doing it I didn't really think too hard about how difficult a process that might be. But it was also at a time where probably many women, or women in general, were not actually raising at all. This was back in the early 2000s, and certainly in Britain I'm probably one of the first women to get private equity backing in any business, let alone a healthcare business that was quite complex to explain. I guess how it really all started was me just seeing such an opportunity and being very passionate about the business model and what we were trying to do. I came out of big pharma, so the typical model is that big pharma researches and develops a new therapy, takes time to bring it to market through clinical trials, gets it approved with the regulators, and it's reimbursed and you're good to go. And patients get access. Where I fitted in with my model, which really was an idea that was born out of my time working actually in sales and marketing within J&J, is in that phase post-clinical trial and prior to drug approval. What was happening is that the majority of drugs were getting approved in the US by the FDA, and the cycle into Europe, for example, then can take several years. There's a gap of that period of time, and in certain therapy areas like oncology, for example, waiting for approval can be too late for some of those patients. I saw an opportunity when I was in big pharma. I saw firsthand when patients with HIV and AIDS were being treated with a drug that was still in development because there was nothing else on the market, no other option. So I created the model that was really to enable patients to get access to medicines that were not yet approved. Now, they may well have been approved in the first instance in one other country, but they weren't approved in the country where the patient resided. That was the idea of the business, and that's what we were doing. And then sometimes what happens is a drug might be approved in one country, but there may not be an approval coming at all in another country. So there was a mechanism that most regulators have in place already to enable access on what's called a compassionate basis. When there isn't a licensed alternative, then there's this mechanism in some cases to enable access. Using that sort of methodology, coming out of big pharma, I knew that this had to be part of the life cycle of a drug, particularly in areas like rare disease, oncology, infectious disease. I think when you look at what happened with COVID-19 and the vaccines for COVID, it's a classic example where there's an unmet need and you've got to make something happen very quickly, or where there's a bolus of patients who need a therapy because it might save their life. So that was the idea. Taking that out to private equity, mid-market private equity and banks as well because I raised just over 22 million at the time. I'd never ever done it before, didn't really know how to do it. I went out, worked with a lawyer and a corporate finance house to help me do it, but what I was really good at was pitching the business. I could explain how we were going to make money and why it was a good idea. I had case studies, a totally proof of concept. But I think the thing that was really helpful as well was that I was able to show this trajectory of cash generation.

That's a great question. So in this early phase, pre-approval phase, there are mechanisms, particularly within most European countries, unlike the US, where compassionate usage can be and is often covered by the health funds, the health system. Now, that process has changed quite a lot over the years and in some respects it's easier than it was 20 years ago, and in some respects it can be harder as well, particularly when you look at high cost medicines. But in general, the cost of those medications is borne by the health system and not the patient directly. When we built the model over a longer period of time, what you would find in some emerging markets and certainly in South American markets a few years ago is that there wasn't a health system that could pay or would pay in those circumstances, and often actually it was the families rallying around trying to find the money to pay. But the other side of that is in some cases we were working on behalf of the pharmaceutical companies, and pharmaceutical companies would often provide on a compassionate basis as well, so they weren't really charging for the medicine.

Oh, that was a horrible situation, really. I should have tempered that with... it was my baby. I built this business, and there's lots of value and benefit in working with private equity, and I don't want to be disparaging of it at all. But when you're a founder, an entrepreneur, and you are building that business, it's a very personal thing. It's one of my key learns: I brought in private equity and they honestly didn't need to do very much in the almost 10 years we worked together. I saw it as a partnership. We paid dividends along the way, they got paid back their original equity check very early, so it was a very good investment for them. I worked really hard, but I was driven more by making drugs accessible to patients, supporting doctors, and supporting the pharmaceutical industry, growing the brand, and building a market. I'm very grateful to them for having enabled me to do that. They weren't in the business owning it and driving it in any way; that was definitely down to me and the management team around me. The horrible part was, in my case, just the exit process. It's brutal. You suddenly find yourself on a different side of the fence. You worked collaboratively with these partners, your investors, for a long period of time, and then suddenly you're on opposing sides. I found that really hard. In the end, for me, it was just a really difficult process, especially because in the end I didn't stay with the business as it was sold.

Well, for private equity, it's all about valuation, getting the best possible deal because of course they have their investors, which of course I understand. Being so many years later, you do appreciate that. But for me, it was still my baby. What happens at that point is that you're not on the journey that you still want to be on. For many entrepreneurs, maybe they stay with the business post a new deal, a new buyer. For me, it wasn't going to work that way. I would have wanted to carry on, make the choice myself about the investor that was coming in, because again I saw it as a partnership. There was a real conflict in this particular case where they need to maximize value, I understand, I want them to maximize value, but for me I want to be part of the new investment vehicle. It's quite hard to achieve that. I can understand their dilemma, but also for me it was a heartbreaking process. Most founder entrepreneurs, when they have to part ways or where things change and it's no longer their baby, would say exactly the same as me. It's just heartbreaking. It was more about the fact that it was a very emotional situation for me.

That's a great question. I had moved to the States, back in 2009, and I explained to them that this is a British firm. I explained that the future growth of the business really depended on us being in the United States, and at some point having a US investor to help on that journey was the ideal scenario, which they did agree with initially. The other part to it is finding a strategic investor, someone that understood the healthcare space and could help develop and grow the business. Probably at that point, having an investor that was much more of a healthcare specialist was what we needed. So it was definitely to fund growth, definitely an investor with more healthcare expertise. Also, my investors had been in for nearly 10 years, and that's a long time because most of the time private equity is not in for that length of time, so it was quite obvious that there was going to be an exit route for them at some point.

I hope this will be helpful for people that have to go on this journey. It was really incredibly intense for me and really hard. Life since has brought so much opportunity and so much joy, and I don't dwell now on what might have been, what could have happened. But being out of the business probably the first year was really rough because I'd lost something that I was so passionate about. I built a global brand, created a market, so I was bereft that first year. We also moved back to Europe at that point, so life was just a little up in the air. The other thing that happened in that first year of me coming out of the business is I lost my sister to cancer. In a way, it was such a godsend because I was back in Europe and I could spend a lot more time with her. If I'd still been based in the US, I think that would have been very difficult. I had other things to focus on at that point. My sister was what was most important, my family was what was more important. It sounds like a terribly perverse thing to say, but it was a distraction. So it was terrible the first year, I was really distraught, but at the same time I had other things to think about, and that really helped me. Having an amazing husband and an amazing son and great friends, that was life-saving for me. Then the next thing that came along was the investors at the business that was called Healthcare at Home at the time. They knew me from what I'd done with my business and they said to me, 'What are you doing? We need some help with our business.' So I just got involved in that, and that was my next journey as a chief executive of a private equity backed business.

You're asking brilliant questions, Meg. Honestly, first of all, I was a woman with nothing professionally that I could put my energy towards, and I got a lot of energy and I'm very good at solving problems. So I had the time, I guess, and I needed to fulfill my brain. Secondly, I walk into a business and ask sorts of questions that nobody seems to be able to answer, which to me are very simple business questions. Although I'd never run a clinical business before, it was very different to my business, I knew how to run a business. Some of those basic questions, like what's your cash position, what are the main issues, and who's responsible, I was able to ask simple questions that were very natural to me because of running and building a business. I had a lot of energy, which was required in a turnaround situation. One of the things that people will often say about me is I'm very good at simplifying complexity because I have to get to the heart of the problem and then figure out the solution. I was driven, motivated, and passionate about what the business did. Being patient-centered, supporting health systems, payers, the pharma industry, all of that was sort of familiar to me, although the model was quite different. I could just see so much potential walking in there, walking into the drug warehouse, walking into customer services, walking the floors and seeing the chaos, the high sense of stress. Talking to people, it was very clear to me that somebody had to sort this out and make decisions. That person was me. I'm very good at making decisions, I had a lot of pent-up energy, and this was the perfect place for me to use it.

I definitely uncovered the extent of the crisis as soon as I joined. But actually, I joined the business as a non-exec originally. I was asked to look at the strategic options and the direction of the business; the board needed some growth expertise. That was the start of it. I joined as a NED for one board meeting, and at that board meeting it was pretty obvious that there were some significant operational challenges, shall we say. It was pretty quickly after that board meeting they said to me, 'Would you step in while we look for a new chief executive?' I said, 'I'll come in and sure, I'll do it for six months while you find somebody.' Well, I walked into what was a significant turnaround situation. But the good news in all of that is that within 8 to 12 weeks, a lot of the standard daily KPIs were back to normal. There was a lot more work to do, but I was able to demonstrate effective change quite quickly through my leadership and finding people in the business who actually knew what was going on.

I definitely have a point of view on home care, clinical care in the home, and more broadly making provision for patients to receive more care in the home. The pandemic potentially transformed the industry. The key transformation was the broader recognition, more globally too, that home healthcare was an option. Back in 2014, what we saw was very specific use of home healthcare, not as broadly as we need to see it. We've seen the emergence of what we call virtual wards since the pandemic. Well, back in 2014, Healthcare at Home was doing some of that already, but it was emerging and there was a lot of resistance within the payer system. They didn't want to release patients into the home into the arms of a private company; that was quite a challenge in the UK in particular, where you've got state-funded health systems, there's an arm wrestle. We were very specifically managing a lot of high-cost medicines into the home, some of which was more what we would call a dispense and delivery service, medication being delivered to a patient at home with a level of service, helping patients administer their therapy or training patients, particularly those with rheumatoid arthritis, to inject themselves. There's a broad level of home care within that one model. Healthcare at Home was doing really complex work back in almost 10 years ago, and it's doing a lot of the same today. I think there's still work to do, and a lot of it is to do with the payer systems appreciating how to value a home care model and to look at the return on investment over a longer period of time. The pricing of these services still needs some work, and the industry itself needs to create more of a value proposition. I don't think the industry does itself many favors sometimes, so there's work to be done.

The simple answer is no, I can't think of a single example off the top of my head. I think there's some research that probably needs to be done in this area, and I think there's some research underway in the UK which would be helpful because it goes back to my point about people not really understanding how to value this kind of service versus what it costs. The cost-benefit analysis is the piece of work that really needs to be done because if it was easier to determine the longer-term impact, for example improved patient outcomes, adherence, and persistence to therapy, we know that home healthcare and intervention, whether physical in the presence of a patient at home or virtual, various models now, even the use of medical technology in the home that communicates through data analytics that the patient is responding in real time. When I was at Healthcare at Home, we were able to collate all sorts of very valuable data about patient behaviors, and that was before we had higher-level data analytics like we have today. But health systems, if I use the NHS as an example in Britain, it's a very reactive service and it doesn't really think long-term about managing chronic disease and how to measure the impact of something like a home healthcare service over time. So I think that's very nascent in general. With the payers themselves, the pharma companies opening up the dialogue and starting to look at this as part of the health system, not as a nice to have but a need to have, because actually there are improved patient benefits and better outcomes that in the end will drive efficiencies and lower costs.

I think what excites me is what you can do to help diagnose disease. To me, that is super exciting—to think about how all of that data can be consumed more quickly or extrapolated more quickly to identify patients within a broader pool to identify disease. I think that's going to be a game changer when we look at healthcare and how ultimately that will lead us to be able to keep people well for longer, and that in itself will just reduce the significant pressure points we see in all health systems across the world at the moment. I think that really excites me. Part of it as well, or alongside that, is if you identify patients with the potential for disease progression, you're also going to be identifying patients that might be suitable for clinical trials more easily. I think the fact that drug companies can more rapidly bring drugs to market is going to be super exciting as well. It will bring down costs. So those are the areas off the top of my head that I feel most excited about when we look at AI.

I think there's several things. One is what is the business trying to do and where can I add value to that? If you look at TidalSense, the respiratory model, and Entia, the oncology model, for me it was really understanding the patient journey, looking at the impact this technology could have on the patients. If you look at the pricing and reimbursement model of Vital Access, these are services that support the pharmaceutical industry in patient engagement and pricing and reimbursement side of pharma, so I understand those models. What I'm also looking at, particularly with Entia and TidalSense, is the AI and machine learning element, which of course is—I'm learning about that stuff from working closely with the teams. For me, it's feeling like I can add value, but also for me to learn. I'm quite a curious person, I like to learn. Learning about machine learning and AI, I'm getting that definitely there. To some extent as well on the pricing and reimbursement side, looking at the quality of the team, is this a culture I fit with, is this a CEO that needs my advice and will take my advice? This is something you find with a lot of entrepreneurs—sometimes they don't want to listen, sometimes they do. It's got to be a good cultural fit. Looking at the investors, are they good investors, do they have a good reputation, are their goals achievable, are they likely to continue to support the business? And do I see the potential for the business to scale? Growth and scaling is quite important to me. Any business that has an international market opportunity, those are the factors that I look at. And fun, it's all fun, otherwise it's hard work. It's hard work with venture businesses, no matter even if you're non-exec, there's a lot of work to do.

I've invested in a few models over the last few years. The way I invest today is very different to the way I invested in the past. My husband would say that my portfolio is very high risk, and to be fair, I think he's right. Healthcare investing takes a long time, there are a lot of factors. COVID has had a tremendous impact on all of these businesses. The COVID-19 pandemic has had a significant impact on a lot of early-stage businesses. I don't think there's any business that I've invested in in the last few years that hasn't been impacted by that. I saw models significantly increase during the pandemic, and I wasn't an investor in any of them, so missed opportunity. But that's the point—when you're investing, especially early stage, you don't know what's going to happen. A good understanding of what you're investing in, you've got to be prepared to take the risk. The quality of the management team or the founder is what you really have to look at, and have they got capabilities? In the case of Seek Women's Health, that's an investment I made a long time ago, it's quite sizable. Am I still happy with having made that investment? Yes, I am. There are other investments I've made, a couple haven't worked along the way. My learns from that, especially when you've been an entrepreneur—this is my key learn: just because someone has founded a business and they're an entrepreneur, even if it's early stage, do not assume that they're going to do as good a job as you did as an entrepreneur. That is actually my biggest learn. The journey I went on, knowing how hard that is, but I did do a good job. I'm not saying it's an easy journey, but I made investments in people. Not all of them, but this is a learn for me: don't assume that the founder knows what they're doing and don't assume they're going to make it successful. That's one of the reasons why I like to chair or be a non-exec or provide strategic advice, because some of that advice is really valuable. So that's been part of my learning: don't assume that everyone's a genius or that they're going to make it work, because there are lots of failures.

I think my key point is you've got to have your market-product fit really securely underpinned, and you've got to be able to prove it, which is maybe difficult to get your head around but I think that's really important. The commercial route to market, how you're going to make money—I've reviewed a lot of businesses in the last few years, pretty early stage, and I think there's this, particularly seeing this in health tech: a great idea, lots of amazing people, but the key question I ask a lot is how are you going to make money? When's the revenue going to start? At what point are you going to start generating cash? That's my starting point today. Probably when I was an earlier stage investor a few years ago, I would have been a bit more enamored with the big story and the vision and all of that. Now it's like, where's the cash? Because if you're going to borrow money to do this, there's got to be a return. It's not all about the altruistic model. In healthcare, of course we want to drive patient benefit, there has to be value, we've got to save lives—all of that is vital and really important, and I'm still passionate about all of that. But if you're borrowing money, you want to be able to pay it back. So that's where I start with entrepreneurs.

At that point, you can sigh because it's a minor, tiny amount. It's like 3% of available capital invested in women founders. It's ridiculous. So what's changed? I think there's been a lot more investment at very early stage, still not anything compared to male-led businesses. In my day, I can give you an example: my business, I went out but I was very profitable at that point, so I didn't really feel that gender imbalance or that gender preference at all. I didn't ever notice that. Maybe I just wasn't focused on it, but it didn't happen to me per se. I think you are treated differently as a woman in business anyway, and certainly as a founder, as a CEO, you are definitely having to prove yourself every step of the way. Once the money's come in, you're still having to prove yourself. There was a newspaper article—I met a journalist at an event, he said to me, 'It's really interesting because I was pregnant at the time with my son, I had this enormous belly, and he said, 'Wow, how are you running your business?' He was interested in me as a pregnant CEO of a private equity backed business. He said he was going to write an article about it in The Daily Telegraph in Britain. He went out for a few weeks and came back and said, 'Natalie, I can't find anyone—I can only find women running a lifestyle business or somebody running a public part of a public company. You can't find anybody.' So that was in a way that might prove your point; in those days it wasn't that easy. Today we definitely see more women getting funded early stage than we probably did in those days. I had lunch today with another business I'm invested in, a tiny business I've been doing for over 10 years in healthcare. The female founder and CEO just said to me, 'It's been really hard.' She is so exhausted with having to raise money. She's constantly having to raise money, she gets little tranches of money. What she needs is 5 million pounds, and she's getting somebody writing for 75 and then she's not taken seriously in board meetings. She has to jump through so many hoops and jump over lots and lots of hurdles. It was just exhausting listening to her. I'm one of her mentors, I think. So I think there's a long way to go, and I don't know what the answer is. We're definitely seeing more women in private equity. I engage with private equity loads and loads, still loads of men. I actually had a conversation one the other day, talking about opportunities in healthcare, and I said, 'What about women's health?' You could see he was just squirming because he obviously didn't want to go there, didn't want to talk about any women lady bits. All of a sudden, hardcore tech, anything to do with AI, he's interested. So I think health tech if it's run by a woman or founded by a woman, they're interested because that hardcore stuff they can get their head around. If you attach the menopause to that or periods to tech, that's probably where the women are getting their investment in healthcare at the moment. We can laugh about it, but honestly, there are definitely more women decision makers in private equity but still nowhere near enough. Women are still challenged. I would also say just because someone's a woman, it doesn't mean you should invest. Everything else I've already said—get your business model, you still have to have good leadership skills, all of these other things you have to be able to do. To me, that's an equal playing field whether you're male or female. I still think it's hard for investors who are men to fully understand and trust women leaders. We're just a puzzle they can't figure out.

Well, in brief, Lucidity is a consultancy and strategic advisory practice. I work primarily with private equity, venture capital companies, investors looking at life sciences models, pharma service models. When you think about my experience, I can help them evaluate new business models and make investment decisions. I also work with biopharma companies who have some commercial challenges, particularly in the rare disease space or when they're looking at patient-centered models, patient support programs, that kind of thing. Sometimes I get asked for my opinion to solve some obscure challenge in a healthcare business. So that's what I do: advisory, strategic advisory, and due diligence. That's what Lucidity does.

Thank you so much for the opportunity. I've really enjoyed speaking to you too. I hope we have the opportunity again.