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Thread: Curing People could be bad for sustainable business

  1. #1

    Curing People could be bad for sustainable business

    Goldman Sachs makes the important observations: https://www.cnbc.com/2018/04/11/gold...ess-model.html

    Goldman Sachs analysts attempted to address a touchy subject for biotech companies, especially those involved in the pioneering "gene therapy" treatment: cures could be bad for business in the long run.

    "Is curing patients a sustainable business model?" analysts ask in an April 10 report entitled "The Genome Revolution."

    "The potential to deliver 'one shot cures' is one of the most attractive aspects of gene therapy, genetically-engineered cell therapy and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies," analyst Salveen Richter wrote in the note to clients Tuesday. "While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow."


    Richter cited Gilead Sciences' treatments for hepatitis C, which achieved cure rates of more than 90 percent. The company's U.S. sales for these hepatitis C treatments peaked at $12.5 billion in 2015, but have been falling ever since. Goldman estimates the U.S. sales for these treatments will be less than $4 billion this year, according to a table in the report.

    "GILD is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients," the analyst wrote. "In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise."

    The analyst didn't immediately respond to a request for comment.


    The report suggested three potential solutions for biotech firms:



    "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."
    If something has enormous value for patients and society, but not in the economy, isn't there something wrong with the economy? It's not exactly a new phenomen, vaccines that can, if applied on a large enough scale, can eradicate the targeted virus completely, as the virus can't find any hosts.

    How could one provide economical incentives for curing a disease permanently, so it never even occurs again?

 

  • #2
    EVOLVED: extra chromosome! Zappo's Avatar
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    There's an incentive in that if you develop a cure, you suddenly turn the market into a zero-sum game where you can rake it all in and leave the competitors dry. I don't know if that actually works. But I would start by asking precisely that - is the current system actually failing? After all, the text you posted reports that a cure for hepC is available, so Gilead Sciences did decide to develop it, so they must have had reasons. Plus, lots of other companies are working on this tech, and I don't think their market analysts are stupid.

    Maybe the fear that someone else will beat them to the cure and strip mine their market is enough. I really don't know. My point is, any policy decision would absolutely need to answer that question first, with hard data.
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    Cockface! Turjan's Avatar
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    This issue is nothing new, and there are lots of sordid tales of this kind to be found, where economics trump the Hippocratic Oath. One that I had been following during its heydays was the struggle to get doctors to treat gastritis properly. From the discovery that most forms of gastritis are easily and quickly curable to when this finally reached most patients took more than two decades. Convincing the research community took about half of that time, and the staunch resistance by common physicians lasted another decade. Patients with gastritis made up much of the economic backbone of most general practitioners' business, and with them that of pharmaceutical companies. There was no cure, and patients were forced to come back for treatment for decades, like clockwork. The drugs that were needed were often rather expensive, at least the better ones with less side effects and longer lasting relief. The new treatment consisted of three to six weeks of antibiotic treatment, and the antibiotics that were needed were already out of their patented phase and cost something like $3, not per pill but altogether. And then the patients were cured and didn't come back. Many physicians saw this treatment as an existential threat, which explains their stubborn resistance.

    You can also find similar tales in other fields, of course, where inventions are bought by big companies, only to make them disappear, because those inventions actually solve problems their business is based on.

  • #4
    Rent > Growth and thus why researching a cure is less optimal for the class with capital who finances medical research, than seeking prolongued therapy.

    Sick people need to be seen as a source of rent.
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