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Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

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Re: Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

#21

Post by terminalshort »

A_D_E_P_T wrote: post #18
terminalshort wrote: post #8

Earlier quoted context omitted.

What is the significance of 7-10B if it is "possibly much more than that"? Even if it was $15 billion that's a 15% margin. How is that scandalous pricing?

$7-10B was a lower bound. The actual amount of profit is difficult to determine. Their pricing was considered high enough that it led to a Senate investigation and quite a lot of litigation. (Which likely dug into their profits.) > https://www.nbcnews.com/health/health-news/company-put-profi... They could have priced it lower and still have turned a healthy profit. Still, they played the rules of the game as those ru…

The Senate has investigated ticket scalping at a Taylor Swift concert in Washington DC. That means nothing beyond "it's expensive and that makes me angry!" Yes, they could have priced it lower. 10% lower. (Of course that would have meant $10 billion less for other research and potential disease cures, but who has time to think about that!) And you know what would have happened? The Senate would have investigated because "that's still expensive and it makes me angry!"

I do agree with your point that curing diseases is profitable.

Re: Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

#22

Post by stego-tech »

I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model.

What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech company it is, but those cured patients are far more likely to go on living longer, healthier lives, and in turn contribute additional value to society - which will impact others in ways that may also create additional value. That doesn't even get into the jobs and value created through the R&D process, testing, manufacturing, logistics of delivery, ongoing monitoring, etc. As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business.

If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.

Re: Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

#23

Post by spankibalt »

> "Is curing patients a sustainable business?"

The question is: If a capitalist (or agent in a capitalist system) has a choice between a) investing to produce/producing a cure, or b) investing to produce/producing a more-or-less working symptomatic relief, how many agents/capitalists (in decision-making positions) go for choice B, which essentially turns them into legal drug pushers with a money-printing license?

Re: Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

#24

Post by thousand_nights »

stego-tech wrote: post #22

I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model. What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech…

yeah but the pharma comapnies are only in the business of selling drugs so they would need to diversify into retirement homes or somnething to profit from actually curing people

Re: Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

#25

Post by anonymouskimmer »

throwup238 wrote: post #20

That questions belies a misunderstanding of how the pharmaceutical industry works and I'm having a hard time figuring out if the journalist made a mistake or the report was written by someone with little experience in the industry (I haven't read it). Since we've mostly run out of small molecule drugs, the (vast?) majority of drugs are developed outside the pharmaceutical industry by biotechs funded by VCs and public…

Still need some anti-trust oversight to prevent the competitor with a treatment from buying out and sitting on the cure.

Re: Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

#26

Post by kiba »

stego-tech wrote: post #22

I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model. What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech…

With public transit, value capture is possible if you have the right business model. Public transit is ultimately real estate development.

However, I prefer that the value capture is by the public rather than a private corporation.

Re: Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

#28

Post by anonymouskimmer »

stego-tech wrote: post #22

I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model. What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech…

If a person dies from a disorder in their 20s, they'll never buy your heart medication in their 70s. Today's patient is tomorrow's patient.

Re: Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

#29

Post by stego-tech »

thousand_nights wrote: post #24
stego-tech wrote: post #22

I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model. What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech…

yeah but the pharma comapnies are only in the business of selling drugs so they would need to diversify into retirement homes or somnething to profit from actually curing people

I mean, that's one way to look at it I suppose, and it's why you see Healthcare Insurers and Private Equity diversify into elder care for a captive audience.

In reality though, I was not-so-subtly trying to suggest that if something is necessary for the public good (curing diseases) but a bad business model, then perhaps Capitalism itself is the wrong vehicle for that segment of industry and a different option - be it an incentive structure, government-owned pharmaceutical research, or managed economy - is needed.

Society fundamentally needs things that are simply bad business - sheltering everyone (lowers long-term housing revenue), feeding everyone (lowers long-term food revenue), healing everyone (lowers long-term healthcare revenue), educating everyone (lowers the value of degrees/credentials). If our economic model prohibits or discourages achieving optimal resource usage and human outcomes, then it's our obligation to explore and identify alternatives that may improve those outcomes respectively.

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