Comment by tptacek
8 hours ago
Saying that curing diseases is a bad business model is like saying discovering the world's largest gold mine would be a bad business because you'd eventually run out of gold. The underlying argument doesn't make sense.
8 hours ago
Saying that curing diseases is a bad business model is like saying discovering the world's largest gold mine would be a bad business because you'd eventually run out of gold. The underlying argument doesn't make sense.
It does make sense if you turn it around
"Having permanent patient by treating only symptoms is better than curing them right away"
Basically living (comfortably, or at all) as a subscription service
That assumes equal ability to manage a long-revenue-stream treatment that keeps people alive enough not to die but doesn't help them enough to stop taking it. Doable for somethings. Not so much against cancer.
And it assumes none of your competitors spot the cure that you suppressed or simply didn't look for and eat your lunch by taking all those patients away from you.
If you "accidentally" came up with a single-course cure for something like Crohn's or RA while trying to create a every-three-months recurring treatment instead, would you honestly shelve it? No.
You could make an argument that the incentives discourages certain types of research, but that's assuming a certain level of foreknowledge about how to treat or cure a lot of these things that I don't think we have right now.
No, this is the basic naive argument I'm responding to. It's nice to have long-term recurring revenue, but customers have a very strong preference for a cure, which means the owners of cures will outcompete the owners of subscription treatments. And then to say those cure-owners are in a "bad business", again, is like saying you'd go "aw shucks" if you happened on an enormous seam of gold.
It doesn't make any sense unless there is only one drug company with a total monopoly. Even if one drug company develops a highly profitable drug which only treats symptoms, all of their competitors still have a financial incentive to undercut them by developing a cure.
Aren't there ethical committees to avoid that? Health is not a normal business.
Goldman Sachs modus operandi is leaning too far on the parasitic side of the spectrum
https://jasonzweig.com/wall-street-and-the-vampire-squid-a-b...
That you can imagine an even better business model than X, does NOT mean X is a bad business model!
The argument only makes sense under certain assumptions: you can't protect the IP from being copied (leading to competition and eroding economic rents), or the government will place a price ceiling (price controls).
Otherwise, the demand will be highly inelastic, so you cannot really invent a better business model. The pricing power you would wield as the monopoly provider of life & death would be tremendous.
It would be fruitful to put the example in the article under closer scrutiny.
This was kind of true for Spain: they imported so much silver that they had inflation causing massive economic destabilization.
When the supply runs dry, demand will naturally increase. Hoarders will be golden at that stage.
"I've seen gluts not followed by shortages, but I've never seen a shortage not followed by a glut."
-- Nassim Taleb
It makes sense to people who are smart. People who are biased who don't have the intelligence to think why someone will say something is bad and can only think in terms of simple analogies will of course think it makes no sense. This is because their basic faculties don't make sense themselves.
Let me spell it out why someone would say it's a bad business model:
Get it? Does that make sense? There's more diseases and health issues to tackle then there are available biotech companies so there are PLENTY of better business models to choose from then "curing a disease"
The second reason is that this isn't exactly a gold mine. It's not like it's discovered out of nowhere. You have to invest billions and that investment Does not guarantee a return. If any sane person wanted to gamble that much money on something they would gamble their money on the bigger win. Insulin at 60 a month or a cure for diabetes as a one time 60 dollar fee? Which is better?
Do. the. math. and. think.
I'm sorry, but if you _actually_ think about it, your whole premise is ridiculous.
We'll put aside the obvious fact that drug researchers are, you know, people who presumably got into the industry to help people, which includes themselves and their families.
We'll also put aside the fact that drugs go out of patent relatively quickly, and they'd just lose out to generics. Like they do now.
The simple truth is they don't need to manufacture more clients, because a stream already exists. There are always new people developing new diseases and new issues. There's an incentive to come up with new and better tools to pull money away from generics.
Don't fall prey to paranoid thinking, actually think about it.