Deal Or No Deal? Investing into Medicines

Authored by: Jibran Khan

Picture this: A small biotech company has just discovered a revolutionary drug that could cure a rare but devastating disease. The catch? They need millions of dollars to fund clinical trials, navigate regulatory hurdles, and eventually bring the drug to market. Sometimes, companies can’t secure the funding, and the drug never sees the light of day. Other times, investors pour money into a promising therapy, only to watch it fail in clinical trials, leaving everyone hesitant to take similar risks. Investing in healthcare feels like a no-brainer. After all, who wouldn’t want to support life-saving treatments? However, the reality is far from simple. Investing in medicines is a high-stakes game, filled with scientific, financial, and ethical considerations. Let’s break it down.

Clinical Trial Data: The Foundation of Investment

Clinical trial data is imperative when it comes to investing in medicines. Investors want to know: Does the drug actually work? How does it work? Who does it help, and are the side effects manageable? These questions are answered through rigorous testing, although the results can be unpredictable.

Take Biogen’s Alzheimer’s drug, Aduhelm, as an example. When it first came out, it was considered  a potential game-changer. FDA approval usually means a drug has solid evidence behind it, but in this case, the data was shaky. One trial showed promise, but another didn’t. Still, the FDA went ahead with approval, which sparked backlash. Questions about its actual effectiveness and side effects, like brain swelling, made doctors hesitant to prescribe it. Insurers weren’t on board either. Investors saw the writing on the wall. Aduhelm’s sales tanked, and Biogen’s stock followed. It’s a clear example of how uncertain clinical data can rattle confidence, even after a drug is officially approved [1].

To form a better understanding, investors often turn to expert panels, webinars, and company presentations. These platforms allow them to question scientists and executives about the drug’s potential. But at the end of the day, no amount of fancy PowerPoint slides can replace solid, reliable data.

Intellectual Property and Exclusivity: Protecting Investments

Let’s say the clinical data looks good. The next big question is: Who owns the rights to this drug? Intellectual property (IP) and exclusivity are huge factors in investment decisions. Investors want to ensure the company they’re backing has a strong legal claim to the therapy. After all, no one wants to pour millions into a drug only to get tangled in a messy patent lawsuit.

A great example of IP done right is Gilead Sciences’ antiviral drug, Remdesivir. When COVID-19 hit, Remdesivir became one of the first treatments to show promise. Thanks to Gilead’s strong IP portfolio, they  quickly scaled up production and distributed the drug globally [2]. On the flip side, weak IP protection can be a dealbreaker. Just look at the generic drug market, where competition drives prices—and profits—way down.

Market Potential: Balancing Profit and Purpose

Here’s the hard truth: Medications have to make money. Developing a new drug isn’t just scientifically challenging, it’s costly. On average, it costs around $2.6 billion to bring a new drug to market, according to a study by the Tufts Center for the Study of Drug Development [3]. That includes everything from lab research to clinical trials to marketing campaigns.

Once a drug is approved, the real work begins. Companies have to convince doctors to prescribe it, insurers to cover it, and patients to trust it. Take Pfizer’s COVID-19 vaccine, for instance. Pfizer and its partner BioNTech invested billions upfront, but the gamble paid off big time. In 2021 alone, the vaccine brought in over $36 billion in revenue [4].

But not every story has a happy ending. Novartis’ gene therapy, Zolgensma, is a life-saving treatment for kids with spinal muscular atrophy, but its $2.1 million price tag sparked outrage. While the therapy is undeniably groundbreaking, the backlash over its cost shows how tricky it can be to balance profit with accessibility [5].

Medicines save lives, but they are also big business. Investing in therapies is fraught with challenges, from evaluating clinical trial data to navigating intellectual property laws and assessing market potential. While the promise of a groundbreaking therapy can be enticing, the reality is that not all medicines succeed. Investors must weigh the risks and rewards carefully, ensuring that their funds support therapies that are both scientifically sound and commercially viable.

In the end, the question remains: Does money save lives? The answer lies in the careful, ethical investment in medicines that have the potential to transform healthcare. By supporting the right therapies, we can ensure that groundbreaking treatments reach those who need them most, bridging the gap between profit and purpose.

References:

1. Alzforum. (2021). Aducanumab Approval Sparks Backlash. Retrieved from https://www.alzforum.org/news/research-news/aducanumab-approval-sparks-backlash

2. WHO. (2022). WHO recommends highly successful COVID-19 therapy and calls for wide geographical distribution and transparency from the originator. Retrieved from

   https://www.who.int/news/item/22-04-2022-who-recommends-highly-successful-covid-

   19-therapy-and-calls-for-wide-geographical-distribution-and-transparency-from-originator

3. Applied Clinical Trials. (2014). Tufts Center for the Study of Drug Development - Cost of Developing New Drugs. Retrieved from https://www.appliedclinicaltrialsonline.com/view/tufts-center-study-drug-development-cost-developing-new-drugs

4. Pfizer. (2022). Annual Financial Report. Retrieved from https://www.pfizer.com

5. Stat News. (2019). At $2.1 million, newly approved Novartis gene therapy will be the world's most expensive drug. Retrieved from https://www.statnews.com/2019/05/24/hold-novartis-zolgensma-approval/