“Is curing patients a sustainable business model?" Goldman Sachs analysts ask

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: April 13, 2018 at 3:21:43 AM EDT
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] "Is curing patients a sustainable business model?" Goldman Sachs analysts ask
> Reply-To: dewayne-net () warpspeed com
>
> [Note:  This item comes from friend David Rosenthal.  DLH]
>
> “Is curing patients a sustainable business model?” Goldman Sachs analysts ask
> Analyst report notes that Gilead’s hep C cure will make less than $4 billion this year.
> By BETH MOLE
> Apr 12 2018
> <https://arstechnica.com/tech-policy/2018/04/curing-disease-not-a-sustainable-business-model-goldman-sachs-analysts-say/>
>
> One-shot cures for diseases are not great for business—more specifically, they’re bad for longterm profits—Goldman 
> Sachs analysts noted in an April 10 report for biotech clients, first reported by CNBC.
>
> The investment banks’ report, titled “The Genome Revolution,” asks clients the touchy question: “Is curing patients a 
> sustainable business model?” The answer may be “no,” according to follow-up information provided.
>
> 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.
>
> To get around the sustainability issue overall, the report suggests that biotech companies focus on diseases or 
> conditions that seem to be becoming more common and/or are already high-incidence. It also suggests that companies be 
> innovative and constantly expanding their portfolio of treatments. This can “offset the declining revenue trajectory 
> of prior assets." Lastly, it hints that, as such cures come to fruition, they could open up more investment 
> opportunities in treatments for “disease of aging.”
>
> [snip]
>
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