How pharmaceutical industry financial modelers think about rare diseases • Hacker News Board

Re: How pharmaceutical industry financial modelers think about rare diseases

#11

Post by csunbird » Tue, Apr 30, 2019, 1:33 PM UTC

btown wrote: post #4

This article does a good job showing how big an impact the concept of "time value of money" can have on a multi-year investment of any kind - pharmaceutical or not. (Particularly since many of us in software are effectively investing nontrivial amounts of our salary in illiquid investments.) I'd imagine that many tend to think of a $X investment as a $X investment... but if that investor could get effectively compoun…

I agree completely, most people overlook the "opportunity cost" of investments. If an investment makes %3 per year but you could invest in something else that makes %4 per year, while you did make profit, you actually lost money, because you missed an opportunity to make an extra revenue equals to %1 of your money (or %33 more profit).

Re: How pharmaceutical industry financial modelers think about rare diseases

#12

Post by Vaslo » Tue, Apr 30, 2019, 1:36 PM UTC

cryoshon wrote: post #9

Vaslo wrote: post #5

Throws a little doubt on those who say the money is in the treatment and not the cure :).

not exactly -- it's more that the money is in whatever they can get passed through clinical trials. if that's a cure, great. if not, it'll still sell. there is no inherent incentive to deliver a cure from a drug product, provided that there is no competitor drug. luckily, there's also no realistic incentive to sit on a cure because it can be priced to be profitable even if the cure makes itself obsolete, which is ext…

I was joking a bit.

I agree with your last statement, and I'd argue as well that if you had the cure to say, cancer, you could charge whatever you wanted for it (at least in the short term). When it comes to money, you just can't take it with you, and you'll spend pretty seriously to improve your lifespan.

Re: How pharmaceutical industry financial modelers think about rare diseases

#13

Post by tzs » Tue, Apr 30, 2019, 1:38 PM UTC

hammock wrote: post #6

Shorten or remove the patent benefits awarded to new drugs, and the calculus changes dramatically.

How about go the other way? Make the patent term much longer, but add a compulsory licensing system that allows anyone to make and sell the drug if they pay a royalty at a rate set by regulation.

Re: How pharmaceutical industry financial modelers think about rare diseases

#14

Post by schemathings » Tue, Apr 30, 2019, 1:42 PM UTC

When the whole Martin Shkreli saga was making the news I ran across his youtube channel and did end up watching his 'How to analyze a clinical trial' series of 4 videos to understand the process .. they're long but it was interesting to some extent as someone from outside that industry .. https://www.youtube.com/channel/UC8gjB1PSXv_oAUSAQ16S0fA/sea...

Re: How pharmaceutical industry financial modelers think about rare diseases

#15

Post by deugtniet » Tue, Apr 30, 2019, 1:44 PM UTC

chadash wrote: post #10

I was surprised that this article didn't mention the Orphan Drug Act of 1983, which was passed by congress to facilitate the development of drugs for rare diseases (many other countries have similar legislation). This act gives tax incentives, subsidies, lowers clinical trial requirements and increases exclusivity for the development of "orphan drugs", which otherwise might not be economically viable to develop. That…

These drugs will be registered as an orphan drug, it's a rare disease this guy is writing about, his sheet estimates 200 living individuals in the US. These days, many if not most drugs are registered that way. The author assumes an orphan drug registration for this drug.

The pharmaceutical company usually tries to register all their new drugs as orphan drugs initially, and as a drug becomes profitable for a certain disease, other diseases (more common diseases) are included in the registration to maximize profit.

As an addendum, the development costs for orphan drugs are not magically low, it's still multiple hundreds of millions that the company has to put up with before approval.

Re: How pharmaceutical industry financial modelers think about rare diseases

#16

Post by dekhn » Tue, Apr 30, 2019, 1:46 PM UTC

hammock wrote: post #6

Shorten or remove the patent benefits awarded to new drugs, and the calculus changes dramatically.

How, specifically? Most people would expect that if the patent benefits were reduced, there would be reduced incentive to invest the absurd sums required to develop a drug.

Re: How pharmaceutical industry financial modelers think about rare diseases

#17

Post by swarnie_ » Tue, Apr 30, 2019, 1:53 PM UTC

schemathings wrote: post #14

When the whole Martin Shkreli saga was making the news I ran across his youtube channel and did end up watching his 'How to analyze a clinical trial' series of 4 videos to understand the process .. they're long but it was interesting to some extent as someone from outside that industry .. https://www.youtube.com/channel/UC8gjB1PSXv_oAUSAQ16S0fA/sea...

I also followed his saga and watched both this series and his general stock picking analysis videos.

If you can separate yourself from the persona he tried to cultivate and enjoy having your excel skills emasculated there both great watches

Re: How pharmaceutical industry financial modelers think about rare diseases

#18

Post by schemathings » Tue, Apr 30, 2019, 1:58 PM UTC

swarnie_ wrote: post #17

schemathings wrote: post #14

When the whole Martin Shkreli saga was making the news I ran across his youtube channel and did end up watching his 'How to analyze a clinical trial' series of 4 videos to understand the process .. they're long but it was interesting to some extent as someone from outside that industry .. https://www.youtube.com/channel/UC8gjB1PSXv_oAUSAQ16S0fA/sea...

I also followed his saga and watched both this series and his general stock picking analysis videos. If you can separate yourself from the persona he tried to cultivate and enjoy having your excel skills emasculated there both great watches

If your goal is to have your ego deflated in Excel, this is always a good place to start .. "You Suck at Excel with Joel Spolsky" .. https://www.youtube.com/watch?v=0nbkaYsR94c but I agree, Shkreli definitely had the whole speed run thing down with Excel.

Re: How pharmaceutical industry financial modelers think about rare diseases

#19

Post by ekianjo » Tue, Apr 30, 2019, 2:10 PM UTC

caublestone wrote: post #2

I met a PHD chemist who spent 30 years developing drugs. Over that period he developed 20,000 APIs. 4 were approved. 1 made it to the market.

That's more than what most PHD produce in their careers (in terms of go to market).

Re: How pharmaceutical industry financial modelers think about rare diseases

#20

Post by ekianjo » Tue, Apr 30, 2019, 2:11 PM UTC

lotsofpulp wrote: post #8

hammock wrote: post #6

Shorten or remove the patent benefits awarded to new drugs, and the calculus changes dramatically.

The only change I can see is needing to increase the cost of the medicine to make up for the reduced exclusivity period, or a reduced incentive to research medicine.

You can't just reduce the patent period without reducing the regulatory process that is required to get stuff approved. It would not work otherwise.