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'Is Curing Patients a Sustainable Business Model?' Goldman Sachs Analysts Ask (arstechnica.com)
In an April 10 report for biotech clients, Goldman Sachs analysts noted that one-shot cures for diseases are not great for business as they're bad for longterm profits. The investment banks' report, titled "The Genome Revolution," asks clients: "Is curing patients a sustainable business model?" The answer may be "no," according to follow-up information provided. Slashdot reader tomhath shares the report from Ars Technica: Analyst Salveen Richter and colleagues laid it out: "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... While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow."
For a real-world example, they pointed to Gilead Sciences, which markets treatments for hepatitis C that have cure rates exceeding 90 percent. In 2015, the company's hepatitis C treatment sales peaked at $12.5 billion. But as more people were cured and there were fewer infected individuals to spread the disease, sales began to languish. Goldman Sachs analysts estimate that the treatments will bring in less than $4 billion this year. [Gilead]'s rapid rise and fall of its hepatitis C franchise highlights one of the dynamics of an effective drug that permanently cures a disease, resulting in a gradual exhaustion of the prevalent pool of patients," the analysts wrote. The report noted that diseases such as common cancers -- where the "incident pool remains stable" -- are less risky for business.
For a real-world example, they pointed to Gilead Sciences, which markets treatments for hepatitis C that have cure rates exceeding 90 percent. In 2015, the company's hepatitis C treatment sales peaked at $12.5 billion. But as more people were cured and there were fewer infected individuals to spread the disease, sales began to languish. Goldman Sachs analysts estimate that the treatments will bring in less than $4 billion this year. [Gilead]'s rapid rise and fall of its hepatitis C franchise highlights one of the dynamics of an effective drug that permanently cures a disease, resulting in a gradual exhaustion of the prevalent pool of patients," the analysts wrote. The report noted that diseases such as common cancers -- where the "incident pool remains stable" -- are less risky for business.
Businesses need a profit. I'm sure there are some conspiracy theorists that will crop up around this point, but the amount of research and spending to get only a short burst of financial gain is impractical.
Some would argue that this should be government funded and all I can say is... well good luck, at least in the US we cut that funding for bombs and missiles.
I don't read AC
These guys are what give capitalism a really bad name. Yes, a company can't exist without profits, but it's not like there aren't plenty of diseases we can't cure still. And if you think about it, indefinitely siphoning money from seriously ill people as a business model is pretty sick, no pun intended. We only put up with it as a society because it provides a powerful incentive to actually develop treatments in the first place. But if people start seeing that as a second-best option, I think society will quickly lose patience with them.
Fortunately, there are almost always those willing to offer an improved service that others aren't, if there aren't any significant barriers to doing so. In the end, it doesn't really matter that some slime think it's better NOT to cure people of illnesses outright, letting them suffer for the rest of their lives while bleeding money from them. There will also be those that choose to offer better services, like full cures, for lower overall profits. Because it's the right thing to do.
Sorry, pharmaceutical companies. You'll have to deal with that. If you start deliberately avoiding effective treatment, you invite societal wrath - probably resulting in even more soul-crushing regulation.
Irony: Agile development has too much intertia to be abandoned now.
Cure that disease so the other ones have a chance to take root and you can make money curing them as well!
That's guaranteed long-term profit. you are known as the company that cures things and people go to you before anyone else. What's not to like about this arrangement?
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
It's easy to grasp once you accept that you are effectively an animal that exists to make a profit for someone else.
Get with the program or you will die very quickly and even more unpleasantly. This is your only instruction/warning.
Why is Snark Required?
Big pharma has been peddling antidepressants that largely don't work or are actually counter-productive, but have a host of side-effects, including suicide and addictiveness.
Some hallucinogenic drugs such as psilocybin and LSD, on the other hand, have shown remarkable, disease-changing curative properties, but are schedule 1 drugs.
We didn't need Goldman Sachs to reveal that curing patients is not the best model for big pharma. Everybody with half a brain must have known this by now. Enjoy your destructive and never-curing antidepressants.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
It's almost as if technology is advancing beyond the useful life of capitalism.
Nah who are we kidding, praise the almighty dollar!
Goldman Sachs is a large financial company who's whole buisness is taking other people's money, and investing it to make more money for them while siphoning a portion of it for themselves as payment.
Sure many millionares and billionaries have big ticket accounts, but there's also Joe Shmo, who has a modest 140k, or 200k retirement account there. Since all the money from each account is pooled to give Goldman the capital to invest, failed investments will impact all portfolios.
Investing in companies that develop cures is all good and dandy assuming all are as successful as Gilead. However, for every successful business, there are failed ones. Here, Goldman is basically saying that in the best case scenario the profit was not good enough to justify the investment even if they made an okay profit. After all, that one 'decent' success needs to offset the number of failed companies that Goldman also had their money on.
Assuming they had a net gain including all the losses, then it comes to wither the amount expended was worth the profit. It's more than monetary here, this includes paying for research consultants, retaining experts to vet companies, visits and check ups on said companies as well as all the menagerie of departmental-ism compared to that same expenditure on something else, as you put it.. a company whose drug suppresses the illness that would produce more money over a long period of time.
As a Joe Shmo do you want to see your retirement account grow faster or slower? Big or small, we're all capitalists, and unless Goldman wanted to discriminate accounts (and get sued) every customer they have suffers or gains; details be damned apparently.
I don't read AC
The answer is "yes" when people have to make price-conscious decisions for their healthcare because people naturally will prefer a one time expense over open ended expensive treatments.
If you socialize costs while maintaining private health providers, however, curing diseases ceases to be an objective for doctors or drug companies.
If you socialize costs and have public healthcare providers, one time cures are preferred to ongoing expensive treatments. That's better than the mixed system the US has right now, but it's still worse than a fully private system.
You need medicine research to be funded by the goverment. Because the companies just said "Ain't no money in it."
Capitalism is a great system as long as there are profit motives, but falls far short where quality and safety are most important, profits be damned.
systemd is not an init system. It's a GNU replacement.
There's no money to be made in health.
This is the basic reason that a private healthcare system can never be an ethical or ideal system. Making a profit can only come at the expense of someone's health, life, or livelihood. It ultimately places the burden of providing that profit on society as a whole.
The only rational and ethical health system is one that is non-profit.
"What do you despise? By this are you truly known." --Princess Irulan, Manual of Muad'Dib
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If what you say is as obvious as you say it is, then Goldman wouldn't be asking the question, and this article wouldn't exist.
The cost of bringing a new drug to market is estimated at $2.5bn (R&D, failed attempts that you have to try before you find something that works, regulatory approval), so the sales in 2015 completely covered the R&D costs with $10bn split between manufacturing costs and profit. The cost of producing Sofosbuvir is around $300 for a course of treatment (at least, that's their target price point for generic versions in developing countries) and the price is over $30K (sometimes a lot more, depending on locale), so production costs amount to around 1% of the revenue. Let's be generous and say that it's 5%, to include distribution and so on. That leaves a little over $9bn profit, after all R&D costs are paid, in their best year. This year, all of the R&D costs are already paid off, so that $4bn is 95% profit. If they completely eradicate the disease this year to the extent that there are no further sales, they will have made well over $20bn in profits, from an investment of around $2.5bn.
Now, I don't work for GS, but I'd be quite happy with a 1000% ROI over a period of 10 years (from discovery to peak) sounds pretty good. That works out at an annualised 25% ROI. If GS can recommend a place where I can get a better return on investment, then I'd be very happy to hear about it!
If they didn't cure the disease, then they'd still have exclusive rights until 2030, but they certainly wouldn't be able to charge as much (people won't pay as much for a treatment as a cure). They wouldn't have made it through the fast-track FDA approvals process, so they probably wouldn't have made any money yet, because they'd still be in phase 2 trials. And they'd have a product whose value could be wiped out instantly if a competitor did produce a cure.
Again, sounds like a cure is a better business model to me. Now that there is a cure, I bet no one is investing in producing an alternative, because by the time it's approved (no fast track if there's an existing cure) they'll only have a few years before generic versions of Sofosbuvir flood the market at $300 per course of treatment.
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The big players don't really find new drugs at all. Most of them have cut or eliminated their basic research units.
New drugs are usually discovered and isolated at public universities, then the initial stages of commercialization are done at a startup or various small (or less small, but more diversified) companies, then one of the major pharma companies will buy the rights and take it through the last stages of certification. Or maybe shelve it until a later time.