The healthcare landscape is evolving at a breakneck pace, driven by technological advancements, shifting market dynamics, and an increasing demand for innovative solutions. Venture capital firms are playing a key role in funding the next wave of healthcare innovations, but uncertainty surrounding changing economic conditions and regulatory policies adds complexity to the path forward. At the Yale School of Management's 22nd Annual Private Equity & Venture Capital Symposium, held at Cure on Feb. 21, 2025, industry leaders gathered to explore the challenges and opportunities shaping the future of medicine. Experts from the venture capital and healthcare technology sectors shared insights into where investment dollars are flowing and how emerging trends could redefine patient care. "Over the last five years, we've been on a roller coaster in life science and healthcare investing. With a stagnant IPO market, there's currently gridlock in terms of capital not getting recycled into new investments," said Christopher McLeod, Managing Partner at Elm Street Ventures, who moderated the Symposium’s Healthcare and Technologies panel. "And with federal grant funding being put on hold, expenditures on research and new technologies are being delayed." So where might we be headed during this unpredictable time? Here are five trends and predictions the panelists shared.
Increasing Demand for Mental Healthcare Services
Kwasi Kyei, Co-Founder and President of Handspring Health — a full-spectrum virtual behavioral health clinic for children, adolescents and young adults — emphasized that significantly more young patients are seeking mental healthcare services than there are practitioners to help them. The model of care delivery is in dire need of change.
"The level of self-harm and suicidality is very high. In order to treat kids well, you have to build a differentiated care model that's a little bit higher touch," he contended. "The demand for services is continuously rising at a very fast rate, but we are not producing as many providers at the same rate."
One way to improve the care model is to invest in technologies, such as artificial intelligence (AI), to make workflows more efficient. AI could be useful for matching patients with the most appropriate providers who take their insurance, considering clinical area and demographic data, to ensure the best fit. It could also be used to transcribe therapy sessions to generate real-time documentation that the provider could simply review, edit and approve after a session, saving precious minutes of manual note generation that could be applied to care for the next patient. Handspring is already leveraging AI to do both.
Voice-enabled AI talk therapy is another new approach that Kyei believes may have a place in mental healthcare.
"I genuinely think that in the next two years, AI therapists could provide effective support for individuals dealing with mild stress and wellbeing concerns. I see these evolving into AI buddies — from chat tools to voice, and eventually to full avatars," he predicted. "People are a lot more comfortable interacting with these tools in a way that we've never seen in the past."
It could also make psychotherapy affordable to people who might not have otherwise had the means to pay for it.
The Pending Pharmaceutical Industry Intellectual Property Cliff
William Slattery, a partner on the Therapeutics team at Deerfield Management*, likens today's biotech environment to A Tale of Two Cities. "There are best of times and worst of times scenarios in each area," he explained.
For example, the discovery of drug targets relevant to various disease processes has increased. However, it's difficult to sift through to determine which ones have greater potential. AI is making that easier by becoming a vital component of the drug discovery process, but target discovery and validation are still challenging.
Slattery also noted that the pharmaceutical industry is in dire need of innovations over the next five to 10 years. During the industry's best of times, it has been riding a wave of new patents and commercial successes, but the end of that wave is in sight.
"The pharmaceutical industry has a massive intellectual property cliff that's going to begin around 2031 to 2033. They're very hungry for near-commercial ready or at least late-stage clinical development assets," said Slattery. "But a lot of our early discoveries aren't going to be ready to fill the void and the revenue gap."
AI Has Value, but People and Conventional Tools Still Matter
AI is transforming drug discovery, but companies still need to validate the compounds they are discovering, explained Julie Wolf, PhD, partner at 2048 Ventures.
"A lot of people don't realize the level of validation that some of these discovery engines need for people to really trust the compounds being discovered," she noted. "I'm a little more old school because I think folks are going to need things like animal models."
She believes that the next generation of venture scale companies will include those who accrue their own data.
"In the therapeutics world, this means creating your own data reservoir that you can continually mine. It will allow you to become faster at screening your own internal processes," Wolf added. "This is where we think the world is going."
AI could also prove useful for predicting whether a clinical trial has value before it gets started.
"Imagine getting to a point before spending $300 million on a single phase 3 study where we can run these models. We can take informatics that have mined all of the previously published data and bring it into an algorithm that gives us some predictability and a higher degree of confidence," said Slattery. "We're not there yet, but I see that as the Holy Grail."
Personalized Medicine will Become Even Better
Many of today's targeted medications take aim at proteins produced by errant genes. The panelists believed that personalized medicine will move beyond the human genome.
Slattery predicted that new drugs will be developed that are customized to an individual's metabolic profile, such as liver metabolism. He also highlighted the importance of understanding how the immune system reacts to the environment.
"We've already seen some sledgehammer strategies for autoimmune diseases that have changed the quality of life for many patients, but they come with liabilities. We're going to see more personalized approaches around how we modulate the immune system," Slattery explained.
Wolf sees a role for personal devices in personalized medicine.
"From the way we interact with our devices, which will give us earlier signs of something not being right, to the way we can select patients for clinical trials or identify the right provider for someone to see, the quantitation of just about everything is what the future of personalized medicine looks like," she contended.
Value-Based Care May Be Rooted in Well Care
Wolf noted that America's healthcare model is a sick-care model rather than a preventive care model. But well-care has more value in the long-term by preventing illnesses that are costly to treat.
"There's some talk about moving Medicare into a value-based system by 2050. We can incentivize people to go to the doctor before they are sick, to get treated before conditions worsen and to have the resources they need to be more proactive," she explained. "Those are the types of solutions I would personally like to see become successful. Then we won't have to worry as much about who has access to healthcare, but how we prevent people from needing healthcare treatment in the first place."
*Cure is an affiliate of Deerfield Management.