12 ms·

Goldman Sachs asks in biotech Report: Is curing patients a sustainable business? (2018)

• moelf 1y ago
  (2018)
• doublerabbit 1y ago
  No not really. Just allow euthanasia and be done with it. Yes. there are moral grounds to it. You don't want to live life, why can't you just do it peacefully? I barely want to live another day of life at the age of 36 :/
• A_D_E_P_T 1y ago
  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. (Possibly much more than that.) Its pricing was scandalous, but that's not the issue here; the point is that it was unequivocally one of the most profitable drug launches in history. Sure, the eradication of Hep C might make it "unsustainable" -- but it's not as though there's a lack of other diseases or maladies to contend with. Take the profits and plant new seeds, buy new technologies, develop new drugs. Besides, the research and development of new drugs has never been a stable business model, and never truly sustainable off one discovery, on account of patent expiry terms, generic competition, etc.
  • pdonis 1y ago
    > Its pricing was scandalous So if the pricing hadn't been "scandalous" by your definition, would it still have been profitable? You do realize that the profits are there because of the pricing, right?
  • terminalshort 1y ago
    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?
    • A_D_E_P_T 1y ago
      $7-10B was a lower bound. The actual amount of profit is difficult to determine. 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-profit-over-patients-pricing-1-000-hepatitis-pills-n472171 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.
      • terminalshort 1y ago
        The Senate has investigated ticket scalping at a Taylor Swift concert in Washington DC. That means nothing beyond "it's expensive and that makes me angry!" Yes, they could have priced it lower. 10% lower. (Of course that would have meant $10 billion less for other research and potential disease cures, but who has time to think about that!) And you know what would have happened? The Senate would have investigated because "that's still expensive and it makes me angry!" I do agree with your point that curing diseases is profitable.
  • refurb 1y ago
    I had the same impression - this article demonstrates the depth of knowledge I’d expect from someone completely unfamiliar with the industry. 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.
  • mrdependable 1y ago
    But the article uses this exact example, or am I missing something?
• egypturnash 1y ago
  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.
  • terminalshort 1y ago
    Source on labs not researching gene therapy "here"?
  • loeg 1y ago
    Which governments in particular; how much funding; and what outcomes have they actually achieved? (In general the US actually subsidizes pharma for the rest of the world.)
    • Loughla 1y ago
      >In general the US actually subsidizes pharma for the rest of the world. I've never understood this argument. Our companies make money off of people in other countries. I understand that our costs are higher in the US, but I don't get how we're subsidizing the rest of the world when they pay for the drugs as well. It just seems like our funding scheme for healthcare is broken. What am I missing?
      • loeg 1y ago
        https://reason.org/commentary/how-america-subsidizes-medicine-across-the-world/ https://reason.org/commentary/how-america-subsidizes-medicin...
• snowwrestler 1y ago
  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.
  • idontwantthis 1y ago
    As long as government regulation prevents them from forming a cartel.
    • AuthAuth 1y ago
      It shouldnt be limited to companies within the country. Any foreign company can be a market disruptor here. Assuming the drug approval admin isnt working alongside the 'cartel'.
      • zdc1 1y ago
        And then there's medical tourism, for the people who prefer to shop at one of the other 'cartels'
      • ComplexSystems 1y ago
        And only in the very particular scenario of a national-only cartel which has not successfully roped in other international pharma companies.
    • snowwrestler 1y ago
      Ah yes, the cartel, a famously stable arrangement that never ends in cheating or betrayal.
    • thrance 1y ago
      And as long as those cartels aren't powerful enough to buy the government into submission.
  • HarryHirsch 1y ago
• puppycodes 1y ago
  socialized healthcare please and thank you.
  • deleted 1y ago
    [deleted]
  • Buford_Jones 1y ago
    [flagged]
    • exasperaited 1y ago
      If so, it's not winning, is it? Private US healthcare is winning the race to the bottom on every measure that means a damn.
      • com2kid 1y ago
        I generally agree but look at the qualifications for weight loss drugs in the US vs the UK. Getting approved for weight loss drugs is possible in the US without a ton of work. BMI of 24 and you snore a lot? Possibly covered. High cholesterol and some extra weight? Approved. There are some things the American healthcare system does very well. Not many, but on occasion things work.
    • ggm 1y ago
      Thats simply not true. To argue to an absurd reduction, if that were true the NHS would preference amputation and wooden limbs over all other treatments for infected limbs. They still preference paths short of amputation. It's a race to a medium. the problem is the medium is lower than rich people want, and the masses of poorer people who benefit from being lifted above amputation and a wooden leg don't appear in the cashflow as benefactors. Getting used to a happy medium being lower than many people are used to, is hard.
      • PunchyHamster 1y ago
        The most important part of public healthcare is keeping that base level of treatment so any private medical healthcare needs to be at least this mediocre to be worth it.
• jjmarr 1y ago
  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 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.” It's easy to handwave "capitalism makes curing patients unsustainable" but here we have three strategies for sustainable cures that have a positive impact on society. 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.
  • eulgro 1y ago
    Curing blind children is profitable. If cured, they will likely have more children. Surely some of their children will also be blind, so the company profits will increase. It's a long term investment.
  • jojobas 1y ago
    Obviously a hemophilia cure is a bad investment, recurring lifelong hemophilia treatment is very much more attractive.
  • loeg 1y ago
    Re (1), cure renal disease and save the US alone $30B/year.
• mensetmanusman 1y ago
  It is for startups that can absorb billions then close their doors. It’s not sustainable for businesses who rely on sickness.
• unyttigfjelltol 1y ago
  The analyst is stuck in the past. Genomic solutions are personalized medicine. As long as there are new people, and new combinations of genes, there will be problems to solve. Grow up Goldman.
• throwup238 1y ago
  That questions belies a misunderstanding of how the pharmaceutical industry works and I'm having a hard time figuring out if the journalist made a mistake or the report was written by someone with little experience in the industry (I haven't read it). 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.
• stego-tech 1y ago
  I feel kinda bad for the writer, because it's a good question: no, curing patients is not a good business model, just like public transit is not a good business model. What a lot of folks neglect are N+1-order effects, because those are harder to quantify and fail to reach the predetermined decision some executive or board or shareholder has already made. Is curing patients a bad business model? Sure, for the biotech company it is, but those cured patients are far more likely to go on living longer, healthier lives, and in turn contribute additional value to society - which will impact others in ways that may also create additional value. That doesn't even get into the jobs and value created through the R&D process, testing, manufacturing, logistics of delivery, ongoing monitoring, etc. As long as the value created is more than the cost of the treatment, then it's a net-gain for the economy even if it's a net loss for that singular business. If all you're judging is the first-order impacts on a single business, you're missing the forest for the trees.
  • anonymouskimmer 1y ago
    If a person dies from a disorder in their 20s, they'll never buy your heart medication in their 70s. Today's patient is tomorrow's patient.
    • Spooky23 1y ago
      The issue with that logic there is those basic drugs are mostly generic now. That money is less, and goes to the PBM and generic manufacturers in India.
    • stego-tech 1y ago
      The longer someone lives, the more potential value they can contribute to a society. The opportunity cost is something we've figured out from a medical perspective, but shareholders want returns today, not returns fifty years from now. That is what we need to address.
      • jojobas 1y ago
        They could use profit in 50 years, but it will possibly be someone else's profit.
• spankibalt 1y ago
  > "Is curing patients a sustainable business?" The question is: If a capitalist (or agent in a capitalist system) has a choice between a) investing to produce/producing a cure, or b) investing to produce/producing a more-or-less working symptomatic relief, how many agents/capitalists (in decision-making positions) go for choice B, which essentially turns them into legal drug pushers with a money-printing license?
  • big-and-small 1y ago
    Capitalist system solve this with competition. If there is already market of people paying for more-or-less working symptomatic relief then it's proof these people are actually a good market to sell a cure for x100 price of relief.
• amelius 1y ago
  Of course it's sustainable. It is just not a very good businessmodel compared to some other (cynical) options.
• garyfirestorm 1y ago
  Maybe the insurance should pay substantial amount for drugs/treatment AFTER the patient is cured completely
  • mattmaroon 1y ago
    That’s sort of the case. Gilead’s cure for Hep C (cited in the article) costs more than treating it.
• tptacek 1y ago
  We get threads about this on HN a couple times a year, and I feel like people have never thought this through. The company that cures T1D or MS will make approximately eleventy jillion dollars. The mustache-twirlers engineering MS into a chronic manageable disease rather than curing it would simply be outcompeted and put out of business by the straight-mustached cure owners. If you believe the mustache-twirlers are capable of suppressing knowledge of a viable cure, I'm going to have fun selling you on a lot of more-plausible conspiracy theories; for instance, the faked moon landing, which would have required less collusion and been less impactful to the world. In a strict sense, curing a single disease isn't a long term "sustainable business", because you'll eventually push the population of affected patients below a threshold of profitability. The premise of a major pharma company is that they keep finding other treatments.
  • loeg 1y ago
    Also like, ~everyone who works in pharma, from the grunts up to the C suite, is genuinely interested in making people's lives better and improving health. Profit is a strong motive, but it is not the only motivating force.
  • beeflet 1y ago
    I don't buy that the moon landing is easier to fake than the existence of a cure.
    • tptacek 1y ago
      Scientists are routinely independently re-discovering each others discoveries. The effort to discover cures to important disease is intense. The conspiracy to suppress a cure would have to be vast.
      • beeflet 1y ago
        You don't have to suppress a cure, you can just choose not to release information that reveal one or spend research money in directions that lead to a cure. Also, not that vast if you consider the amount of people who have the information needed to realize what is going on.
• jakub_g 1y ago
  Previously: 2018: 448 points, 370 comments https://news.ycombinator.com/item?id=16827248 https://news.ycombinator.com/item?id=16827248 2021: 104 points, 100 comments https://news.ycombinator.com/item?id=27184116 https://news.ycombinator.com/item?id=27184116
• temptemptemp111 1y ago
  [dead]
• trashface 1y ago
  2018
• missedthecue 1y ago
  Of course it's sustainable. Gilead Sciences is a $155B company originally built on a single drug (Sovaldi) that literally cures Hepatitis C. Now they are more diversified and have a stacked pipeline. The business model just changes to one like oil or mining exploration where you find a deposit with a limited lifespan and you have to keep the treadmill going to find new ones before the mother lode that funds your firm is all tapped out and you go bust. But while it makes for amazing ragebait and threads full of grievances aired against the healthcare system in general, I think the question isn't very relevant because in Biotech, this is dynamic already essentially forced, cure or not, because of *patent life*. A perfect example of this is Lipitor and Pfizer. Lipitor was not a cure. Statins do not cure you. But it was the most profitable drug of all time. But it eventually went off-patent and now the average price on GoodRX for a 30 day supply is only $6. Pfizer stock has never recovered from that success, though they certainly have a sustainable business. The modern-day Pfizer is Merck. Merck has probably the most profitable drug in world history (Keytruda) which is far more profitable than Lipitor, and which has massively increased remission rates for a wide range of cancers, so it's somewhat of a cure as well. But that patent life is about to expire, and 46% of Mercks revenue will disappear with it. Of course, new people are diagnosed with cancer every day, and Keytruda will continue to be prescribed in the millions, but Teva and others will sell the generic version and Merck will lose out on the revenue. So the race is on to get more things through their pipeline, acquire some promising assets, and keep the treadmill going. There are 100+ year old mining and oil companies. None are mining the same asset they had one day one, but this doesn't make the industry unsustainable.
  • danielmarkbruce 1y ago
    This is sort of true but skips the main problem with the framing. "Sustainable" doesn't even matter. If I drill an oil well for $100 mill and it throws off $30 mill a year of profit for 10 years and then dries up, it's a great use of capital. The idea that something with a life of "not forever" is bad by nature is silly.
• shruubi 1y ago
  The problem with investors these days is that too many of them seem so focused on short-term gains and showing their numbers increase quarter-over-quarter that we seem to be incapable of looking at an investment over a longer period of time.
• ineedasername 1y ago
  >Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise. Precisely. Sustainable tech and research must focus on long term disease development, and not merely those already available to the medical industrial complex for continuous revenue. When was the last time we developed a truly new and novel lifelong, chronic but not overly debilitating illness with profitable methods of providing minor alleviation of symptoms? Diabetes is mostly tapped out, cancers are too unpredictable. Frankly? Covid-19 was a squandered opportunity. There was ample raw material to work with truly innovative medical developments in both pharmaceuticals and medical equipment: long term wearable ventilators with expensive filters that must be regularly replaced; new over the counter medications with rapid half lives for maximum daily dose consumption— heck, bring back otc cough medicine with opioids! Damned effective and great stickiness of user base with only minor churn even after the cough is gone! Instead? Vaccines. Such a waste. The only saving grace there is the massive boost the anti vax community got out of it, so I can at least cross my fingers on a measles come back tour.
• apparent 1y ago
  This reminds me of the new-ish treatments that promise to regrow tooth enamel or prevent the growth of bacteria that causes cavities. These won't get widespread adoption until the American Dental Association or whatever says they're safe/effective, but there's a clear conflict of interest because it would have a huge negative impact on their members' business model. There's money to be made selling a cure, but the creative destruction that it can bring will mean entrenched interests will fight tooth and nail (pun intended) to delay it.
  • s0rce 1y ago
    I did my PhD in an adjacent area and its not clear any of these come anywhere close to regenerating your enamel.
    • apparent 1y ago
      Thanks for chiming in. What do you think they do, and why do you think they are perceived as being more effective than they actually are? Any thoughts on the bacteria-morphing one?
      • s0rce 1y ago
        I don't know too much about the bacteria stuff. Regarding enamel, the native structure is very intricate and contributes to the properties. Most of the acellular chemical reminalization just deposits disorganized minerals on the teeth. It might be improved vs. doing nothing (I'm not sure but I do use fluoride reminalization from the dentist) but its not regenerating your enamel. Imagine just slapping some concrete or mortar all over a slowly decaying intricate brick wall vs. rebuilding the brick structure; you may mitigate complete collapse but you didn't fix the decaying brick wall.
        • robocat 1y ago
          Did you see this article which claims "New gel restores dental enamel" https://news.ycombinator.com/item?id=45826995 https://news.ycombinator.com/item?id=45826995
• jmward01 1y ago
  Looks like an old article which has been on HN a few times now. I guess the situation hasn't changed since 2018. This, in a nutshell, is the problem with for profit medicine. If the training signal is money then money will be optimized.
• 0xWTF 1y ago
  Depends on the market. Everyone dies eventually. Every near-fatal illness you suffer is a windfall for the medical system and ensures another windfall later. For all other businesses, it's a little more complicated. If the patient/employee's knowledge, connections, etc, are valuable enough, then keeping them alive and mentating appropriately is inherently good for the business. The question then is "How do you measure 'enough'?"
• deleted 1y ago
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• deleted 1y ago
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• instagraham 1y ago
  Sad but necessary headline (if you don't get attention, no one clicks) that kinda obscures what the report marks as a solution - and no, it's NOT refusing to cure patients. I'm not even close to being a libertarian, but I find that people expect biotech companies to swallow billions of $ of loss as some sort of public good. Reports like these are an attempt to better harmonise their survival model. Companies need to make money to offset their losses, if not to profit. And while biotech companies can profit, these can very quickly be offset by the cost of a single clinical trial - IIRC it costs $1 billion to take any new drug from trial to completion now. Imagine discovering the next penicillin in your garage and then needing to raise $1 billion to cure people with it? The analysts recommendations are fairly tame - companies should target cures for diseases with a lot of sufferers (a social good) + note that there are a LOT of genetic diseases that could benefit from a single-shot cure. Again, not a sympathiser for "big pharma" if that even exists, but I wonder how sustainable a model this can be if companies can get their stock wiped out by a single bad trial. Pharma is notorious as a risky investment - which for some, might sound like a problem for rich people. But really, it then becomes a problem to fund experimental research, the kind that pays off. I'm not looking to defend pharma companies here, only to frame a slightly more reasonable set of terms for this debate. I'm sure such reports have their harms - rare, incurable diseases will get less attention. But we need a solution that acknowledges the constraints, not one that merely wishes away the limits of capital and sustained long-term research.
• mattmaroon 1y ago
  The basic premise is kind of dumb because it’s irrelevant. For one thing, the pharmaceutical industry isn’t one company, it’s hundreds. The example given (Gilead) is of one company that ate a market. They made $70 billion (and continuing) curing Hep C. They probably don’t lose sleep at night about the hundreds of billions in future revenue that will have prevented the other pharmaceutical companies from making when that disease is gone. This is one case where profit incentives align with human welfare. Look at fisheries. They’re collapsing everywhere due to overfishing, the very definition of unsustainable business, because each individual fishermen’s incentive is to catch as much as they can. For another, not all diseases are eliminated by the invention of a cure. Cures for cancer would lead to us living longer and getting more cancer. Cures for emphysema might cause more people to smoke and induce demand.
• wombatpm 1y ago
  Only if you developed a method to give people the disease that you can cure. Then you have a built in market with patent protection.
• shadyKeystrokes 1y ago
  [dead]
• bicepjai 1y ago
  Reminds me of dark mirror episode common people https://en.wikipedia.org/wiki/Common_People_(Black_Mirror) https://en.wikipedia.org/wiki/Common_People_(Black_Mirror)
• tsoukase 1y ago
  Off course curing patients is viable. I am a doctor and I live off from it well enough. Now, if GS means "searching for potential methods to cure patients", then the answer is it depends. Is searching for new oil fields worthless? Or for a new battery technology? The low, even medium, hanging fruits have long been chopped. We have to climb ladders to reach the high hanging ones. This is called investment and is getting more and more expensive.
• purplepatrick 1y ago
  It may not be a sustainable business with current business models. But if cures came with a "post-scription" model where the cured patient paid, say, 0.5% - 1% of their income to the drug company in perpetuity, then incentives are aligned. (Of course, administration is a problem here.) As someone with an incurable disease, I would happily pay for a cure in such a way...
• burnt-resistor 1y ago
  Private equity: hold my beer This is already happening in the form of privatization and monopolization of hospitals and healthcare services like regional hospitals and life flight air ambulance services putting profits ahead of patient outcomes.