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Ready for digital therapeutics? Andreessen Horowitz hopes so

VC firm Andreessen Horowitz argues that healthcare is ready to be disrupted by software and digital approaches and is now putting its money behind the theory.

Machine learning, big data and falling prices for compute power are conspiring to disrupt healthcare, according to venture capitalist firm Andreessen Horowitz, which is launching the Bio Fund on the theory that software will eat biotech and healthcare.

Vijay Pande, a partner at Andreessen Horowitz, will lead the fund, which will focus on computational biomedicine and mostly software companies.

In an interview outlining the fund, Pande noted a few concepts that are worth pondering. Healthcare has gone electronic and a bevy of companies are working to bring analytics, sensors and other technologies to make the industry more efficient. The catch is that healthcare hasn't exactly been reinvented.

Here's a look at the dynamics that are lining up to make healthcare a worthwhile place to invest in startups.

The computing dots have lined up to make bio experiments easier to conduct. Pande said machine learning, nearly free compute and storage and big data are making healthcare ripe for disruption. For instance, the cost of genomic sequencing has essentially gone to zero. Cloud computing will enable a bevy of bio startups, which will be able to launch businesses and scale experiments.

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Algorithms can do better than doctor in many cases. Pande floated the concept that predictive analytics could predict biopsy results without actually putting a patient through one. Pande stopped short of saying technology could cut doctors out of the healthcare equation.

Biology will become a software problem to run experiments with simulations. These efforts will make experiments more scientifically viable.

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Digital therapeutics could reduce the need to pop a pill. I can see the entire pharma industry and the lobbying and marketing behind it raising eyebrows. Pande noted:

To give you an example of what a digital therapeutic would actually do: Let's say I'm borderline for type II diabetes. I could pay someone $100,000-$200,000 a year to follow me around 24/7, like a personal trainer, making me do pushups to build muscle mass and knocking doughnuts out of my hands every time I reach for one. And sure, that would work. It's just really expensive for most (all) of us. Behavioral therapies essentially do the equivalent type of motivation and coordination -- and still have a human-touch element through coaches, messaging, social networks -- but do so in a way that can scale such that costs are dramatically lower.

Because there are existing approaches that have already shown quite good efficacy in this space -- they're just expensive and don't scale. A great example is Stanford's sleep clinic or its pediatric obesity clinic, both of which do amazing things but cost a lot and can only take in a small number of (often privileged) people a year. Yet there are millions of people with type II diabetes ...it's an epidemic.

Digital therapeutics allow such successful approaches to become cheaper and scale. And they have no toxic side effects, which is very appealing from a drug point of view; what we don't like about investing in traditional biotech is the risks due to side effects, additional regulatory issues, and so on.