If a drug company cures their customers, they will have no customers, warn financial analysts in a recent report to the biotech industry.
Analysts from Goldman Sachs met with biotech companies to address this growing issue. “Is curing patients a sustainable business model?” they asked in a recent report.
“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,” analysts wrote in the report to clients.
The report cites new treatments for hepatitis C as a prime example of a cure creating a revenue problem. The new treatment for hepatitis C has cure rates higher than 90 percent. The company’s sales for the treatment peaked in 2015 and has been falling ever since.
The report suggests three possible solutions to the problem of investing in treatments that cure people:
“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.”