General Session: Ken Frazier, Merck and Hemant Taneja, General Catalyst

Well, thank you first of all. Thank you all for being here and giving me an opportunity to give you my views on these issues. So you hit the nail on the head. I've been at Merck for 30 years, and I've had the privilege of being the CEO for now 10 and a half years. Merck is a company that is founded on some very fundamental values. I could just synthesize them by saying scientific excellence is something that's very important, and patient access has always been very important to Merck. So I've interacted with a lot of people in the tech field and a lot of people in the venture capital field over the years. But what I found to be different in our first couple of interactions was the shared values. You just alluded to them. The concept that we want to make sure that what we do puts patients at the center of everything, and therefore obviously makes it possible for their providers, empowers their providers to provide the kind of care that they need. Importantly, a firm that cares about social inequities. And we know that the pandemic has really shown us that the inequities that we have in our society are much more stark than we ever thought they would be. We know that for African Americans, the pandemic has reduced life expectancy by almost four years, compared to about a year for white Americans. And we know that going into the pandemic, there was unequal access to healthcare across a number of areas in this country. So that whole issue about social and health equity has been very important to me at Merck. And so that's an important thing. The last thing I think was really important is this concept that we talk a lot about disrupting industries with tech, right? We disrupt the retail industry, disrupt the automobile industry, for example. Well, the reality of the world is I don't know anybody who wants their health disrupted. People want to know that if in fact they're going to be cared for by someone or through something, that they can trust it. So the last thing was this concept of being very intentional around building companies that have as their core element a social responsibility. I've always felt when I came to work every day at Merck, it was a company that had deeply embedded social values as well as scientific values, and that's why I thought this might be a useful thing for me to try to do as we try to change healthcare.

So, as you may know, Merck has a drug that's been submitted for EUA now. It's called Molnupiravir. It would be an oral agent for COVID-19. It's a nucleoside analog that essentially mimics the RNA in the virus in such a way that it can infiltrate and cause errors in the reproduction of the virus. There's hope that it will be useful because the data suggested that it could reduce hospitalizations by half and deaths by half or more. So to answer your question, the decision was really not a hard one. It goes back to where we started, which is the company believes in this concept of patient access, and that means global access. And we know that this is a virus that has struck the entire world, that if we don't deal with it in the poorest parts of the world, we'll certainly have viral mutations continuing, variants continuing to spring up. So for us, it was just a question of how do we meet the needs of different stakeholders, right? Obviously, we have our shareholders. We have to make sure that they get a fair return on their investments. But at the same time, it's a company that cares very much about global access. And so, you know, when you do an Ebola vaccine, for example, you do that not because you think you're going to make money on it. You do it because you think it's the right thing to do. In this instance, looking at this global pandemic, we asked ourselves how do we optimize patient access and optimize shareholder return? Because to maximize profit is not the right thing. And obviously, if we're going to be a sustainable business model and invent the next drug, we can't just give everything away. So that was how we thought about it. And I think fundamentally it wasn't a hard decision because people said how should we live the values that are the stated values of the company. And I would say proud to see that the company's behaviors are consistent with what we say our stated values are.

Well, it's funny you mentioned climate change because it's very similar. Just like this pandemic is a global problem and it hits different parts of the world unequally, the same with climate change. Because you have three billion more people coming onto the planet in the next 20 years, most of them are going to be in Africa or Asia. They want to have the right kind of human development, and that might involve the use of some fuels that we're cutting back on in the richer part of the world. So the question is how do we subsidize, how do we make it possible for people to have the right healthcare in that area of the world and have the right level of human development around energy in that part of the world.

Yeah, it's interesting. You know, first of all, I've been investing for 20 years. The 20-year arc is used to be sell software to different industries to make them efficient, right? To sell software to the healthcare industry or insurance or consumers and whatnot. After the iPhone and Facebook and Amazon Web Services, we started really redefining experiences in those industries. So what does it mean to have a modern insurance product? Runners insurance, for example. Or what does it mean to get chronic care if you have diabetes, which is what Livongo was? Or what does it mean to consume media on the internet? So as we went down this path of organizing for the last 20 years, content, community, commerce on the internet, it was all driven by serendipity and disruption. So I have to admit, our view was go find the next Zuckerberg or the next Patrick Collison or the next Evan Spiegel, someone fundamentally thinking about the problem differently, and they'll build something that'll just disrupt what's there and create, you know, part in the world but monopolies that own these markets. I mean, that was the mindset. And somewhere along the way we learned, and that's as we've learned as society, that's not a great thing to be doing as you move from scarcity to abundance. Organizing these services on the internet, you don't want a single company or two to have that level of responsibility and power, and you want to watch out for unintended consequences. And so our view going into healthcare and education and other areas now is go from serendipity and disruption to intentionality and collaboration. So now we do a lot of work with a lot of health systems, and I always start by saying we bring ignorance and imagination to the sector because we've seen whatever Airbnb did and we built Kayak and Stripe and Snap and many other interesting companies, but you got to teach us what's happening here, and let's figure this out together as to what does it mean to transition our healthcare ecosystem towards one that's abundant and accessible and affordable, as we said earlier.

I think it's a great point. I mean, it just goes back to how do we do this transformation without causing disruption on one hand? You know, we're building these software companies that can eliminate a lot of jobs in the healthcare sector because automation can be brought in. On the other hand, we have this problem that you're describing: we don't have a mental health workforce in this country that's truly accessible to all. We don't have an elderly care workforce. We saw what happened in nursing homes. So I think to me, this is thinking about the workforce transformation in this industry to say where can automation come in and where can we actually bring empathy and human interaction with consumers? It's a big problem we have to think about over the next few years.

Yeah, and I think that's a lot of where many entrepreneurs, I'm sure many in this room are also focused, is going back to organizing care on the internet so it becomes abundant, it's available everywhere. I do think it'd be great to talk about pharma and the biotech sector for a few minutes because, you know, if we're truly going to make a difference for everybody, the cost structure and the mindset in that industry has to also evolve. When we have to bring technology into this, and we were talking about this in the back room, I'd love for you to just share your thoughts on things we and then collectively all of us should also be thinking about in that context.

Yeah, but it's really interesting. This is again my being a techie comment. You know, I listen to many of the health system CEOs. They're all there with a great sense of mission, and if only they had some profits in their businesses, they would invest that into the community and work on issues like health equity. I listened to you and I thought I learned about pharma, and obviously folks are in that industry to make a difference, and the return on investment keeps going down in terms of what innovation is bringing. And I think this is the interplay where technology can come be a leverage point because if you can make this industry more leveraged with technology, maybe we can shrink the cost of GDP and actually make it accessible and affordable to all.

Well, we've just seen recently the importance of the industry. And I don't want to be self-serving. Albert Bourla's going to come out here in a few minutes. And look, those companies, with the help of technology, developed vaccines in 10 months. I mean, you know, I have to tell you, nobody thought that was possible. And so we've gotten those vaccines, and we've got the monoclonal antibodies, and technology combined with science has allowed us to have those kinds of breakthroughs. I think the challenge for the industry will be, okay, because we were under such time pressure with COVID, we changed our ways of working. Are we going to continue to do that, or are we going to go back to sort of the way things have always been?