Comment by A_D_E_P_T
8 hours 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.
But the article uses this exact example, or am I missing something?
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?
$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-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.
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.
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.
> 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?