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Goldman Sachs: Is Curing Patients A Sustainable Business Model For Big Pharma?

U.S. Air Force photo by Phil Sunkel

Curing sick people presents a problem for biotech investors as the number of treatable patients declines.

In a recent report called “The Genome Revolution”, Goldman Sachs analysts try to determine whether curing diseases is bad for business in the long run, and if so, ways to work around the problem.

"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," analyst Salveen Richter wrote in the note to clients Tuesday. "While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow."

Turning to Gilead Sciences’ hepatitis C treatments, Richter notes the company attained cure rates of more than 90 percent -- which caused sales to fall after peaking in 2015.

"GILD is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients," the analyst wrote. "In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines … Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise."

As for ways to work around the problem of curing too many sick people, the analysts offer a few ideas:

"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."

What about diseases and conditions that simply can’t be lucrative if cured? This remains to be seen.

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