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Meanwhile over in the world where the government sinks a lot of money and energy into its citizen's healthcare, government-funded labs are exploring permanent cures for all kinds of problems via genetic therapy. But not here. Someone's gotta make mad bank off of every aspect of this shit here.
“Solution 1: Address large markets: Hemophilia is a $9-10bn WW market (hemophilia A, B), growing at ~6-7% annually.”
“Solution 2: Address disorders with high incidence: Spinal muscular atrophy (SMA) affects the cells (neurons) in the spinal cord, impacting the ability to walk, eat, or breathe.”
“Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) … Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets.”
e.g. Curing blind children is profitable, since there's so many genetic reasons a child would be blind that you can keep introducing new cures reapplying the same technology.
The report-writer must have been from Goldman Sachs' B-team. It takes five minutes to turn up ample evidence which demonstrates that curing patients can be extremely profitable. Take, for instance, Harvoni -- a drug introduced in late 2014 which cures Hepatitis C following a single course of treatment. It has done something like $100B in revenue for Gilead Biosciences, and, minimally, earned them $7-10B in profit. (P…
Most people in the industry could name several examples of cures that are highly profitable.
Not to mention patented drugs are inherently an “unsustainable business” due to the eventual introduction of generics/biosimilars.
Depending on your development pathway, you’d be lucky to get 6-8 years to turn a profit.
It doesn’t matter if it is a sustainable business. People will do what they can to maximize their income now. If 10 companies are withholding a cure to milk the patients, any one of them can break from that strategy at any time, with near-instant financial reward and competitive advantage. It is not a stable equilibrium.
As long as government regulation prevents them from forming a cartel.
The suggestions on making sustainable cures: “Solution 1: Address large markets: Hemophilia is a $9-10bn WW market (hemophilia A, B), growing at ~6-7% annually.” “Solution 2: Address disorders with high incidence: Spinal muscular atrophy (SMA) affects the cells (neurons) in the spinal cord, impacting the ability to walk, eat, or breathe.” “Solution 3: Constant innovation and portfolio expansion: There are hundreds of…
It's a long term investment.
The report-writer must have been from Goldman Sachs' B-team. It takes five minutes to turn up ample evidence which demonstrates that curing patients can be extremely profitable. Take, for instance, Harvoni -- a drug introduced in late 2014 which cures Hepatitis C following a single course of treatment. It has done something like $100B in revenue for Gilead Biosciences, and, minimally, earned them $7-10B in profit. (P…
It’s not sustainable for businesses who rely on sickness.
The report-writer must have been from Goldman Sachs' B-team. It takes five minutes to turn up ample evidence which demonstrates that curing patients can be extremely profitable. Take, for instance, Harvoni -- a drug introduced in late 2014 which cures Hepatitis C following a single course of treatment. It has done something like $100B in revenue for Gilead Biosciences, and, minimally, earned them $7-10B in profit. (P…
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?
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 rules were set, which a Goldman Sachs analyst, at least, ought to appreciate. There's nothing inherently unprofitable about cures, and the nature of the drug development business is inherently unsustainable.
Grow up Goldman.
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 investors. It's a well understood pipeline now that takes IP from university tech transfer to VC biotech to pre-revenue* IPO with the final exit being an acquisition by a pharmaceutical company, which comes in with the manufacturing infrastructure to take the drug from phase III trials or approval to the mass market. Once a drug is approved (or the phase III is very promising like Sofosbuvir), pharmaceutical companies trip over each other trying to buy the IP. The industry has offloaded most of the scientific risk to VCs and the public while sharing the rewards with those investors.
As long as the number of pharmaceutical companies doesn't drop to oligopoly/cartel levels and capture the regulators completely, the incentives are strong for one pharmaceutical company to buy a cure and take it to market to undercut a competitor's treatment. Even if an oligopoly develops, since there's no "product market fit" risk and zero scientific risk once a drug is approved, financing the purchase is trivial and starting a new pharmaceutical company to compete with the oligopoly is relatively easy. The manufacturing bit is no joke but the amount of money involved even with a single drug makes starting up a new pharmaceutical competitor totally worth it, since the manufacturing and quality control is a well understood engineering problem.
On top of that, it's practically impossible for every pharmaceutical company to have a drug that treats the same thing without a ton of consolidation in the market. Drug approvals often use active-comparators and standard of care controls that raise the bar for each new drug on the market that treats the same thing. A cure on the other hand is essentially just competing against a single golden standard (there are many exceptions but it's a good rule of thumb).
Another factor is pricing. Treatments are generally priced based on how they impact quality of life because that decides how much insurers are willing to pay, especially the big state healthcare providers that have to do hard cost benefit calculations. If a treatment is making bank, the ceiling for what you can charge for a cure is a significant fraction of the lifetime cost of the treatment, and not just based on the QOL impact. It creates a strong incentive for both investors and insurers to get the cure to market.
* If you think unprofitable tech IPOs are bad, most biotechs that IPO do so with zero revenue, let alone profit. Usually to fund clinical trials.