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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 don't need to grow ever bigger and have more profit every quarter. It's perfectly viable to run a business at a steady size and a steady profit for years. Don't confuse "growth" and "profit".
"One-shot cures" mean that you get to sell one to at most every person on earth. That is assuming they'll need at most one shot their entire life. That is currently a market of some seven milliard people. But even if that size doesn't change, if the total population stays stable, the market will not die out: People die, new ones get born, and so the pool of people that might need one of those one-shot cures replenishes itself.
So I'd say that such a business is entirely viable, up to a point. The main complaints seems to be that this model doesn't conjure "value" out of thin air like the silly valley unicorns. And that's just Goldman Sachs being Goldman Sachs, greedy beyond all reason.
Anyhow, I'm not sure that healthcare should be organised as a business. Certainly not the way the USoA does it, where insurance costs $1100/month (so most people can't afford that and so they end up in debt should they need healthcare). Over here they've recently switched to a "free market" model that really means the population gets subjected to a olicharchy of blessed insurers, and the cost of basic insurance is more like 110 euros a month. It buys you about the same in healthcare quality, which IMO could be a lot better with a different market organisation. But you'd have to stop worshipping milton "'free market'" friedman to do it.
That aside, one-shot cures aren't quite the self-extinguishing market that the greedy fucks at Goldman Sachs make it out to be. Moreover, even if they were, more healthy people means more productivity means more wealth creation elsewhere in the system. Again an argument for leaving healthcare out of that commercialisation fixation.