Goldman Sachs Analyst Asks Whether Curing Patients Is A Sustainable Business Model
from the better-to-ask-whether-the-traditional-drug-development-model-is-sustainable dept
Pharma companies generally like to give the impression that their business is a win-win kind of thing: you get better, they get sales. But sometimes the mask slips, and the real strategy that lies behind the benevolent exterior is revealed. For example, back in 2014 we wrote about the CEO of Bayer, one of the biggest drug companies in the world, openly admitting it developed medicines for rich patients in the West that can pay high prices, not for those in places like India that need them just as much, but can’t afford them.
Now CNBC has spotted another revealing remark that probably reflects what many in the Big Pharma world say privately. It appears in a report called “The Genome Revolution” about a new generation of treatments based on powerful genomic techniques like CRISPR. They hold out the hope that many diseases can be cured permanently, for example by editing the patient’s DNA to replace genetic code that is causing the problem. The report asks: “Is curing patients a sustainable business model?” It goes on to explain the issue here:
“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.”
That’s a fair analysis. Given the choice between creating a product that cures people after one use, and another that requires a lifetime’s supply, the rational choice for a company is the latter. The analyst’s question, shocking as it is, exposes neatly the tension between what Big Pharma and its shareholders may want — fat, recurring profits — and what patients and society desire — a short course of treatment that results in a complete cure. As genomic medicine continues to progress, that question is likely to be posed more frequently, both behind closed doors, and in public debates. It will also bring with it another one: if curing patients isn’t a sustainable business model for traditional pharma companies, why not find other ways to fund the development of genomic treatments?