Goldman Sachs warns biotech clients that curing patients may not be ‘sustainable’

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As consumers question whether privatized healthcare is in their best interest, Goldman Sachs says that curing hepatitis C caused a drop in one firm’s drug sales

In a report recently published for its biotech clients, Goldman Sachs questioned whether curing people is good for business.

"Is curing patients a sustainable business model?" the company's analysts asked in an April 10 report about promising research into the human genome. The Goldman Sachs report, which was obtained by CNBC, does not answer that uncomfortable question directly.

But it does point to pharmaceutical company Gilead Sciences as a cautionary tale. The company introduced a treatment for hepatitis C in 2015 that cured more than 90 percent of patients. In the years since, sales of the treatment dropped drastically, according to Goldman Sachs.

While “one shot” cures are one of the most popular aspects of genome research, “such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies," Goldman Sachs analyst Salveen Richter reportedly wrote to clients.

"While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow,” he added.

Concern over high healthcare costs

The outright acknowledgment from the financial services industry that curing diseases with a single treatment is not profitable comes as more American consumers are questioning the value of privatized healthcare.

Addressing concerns about high healthcare costs, a group of United States lawmakers led by Sen. Bernie Sanders (D-VT) last year introduced legislation that would expand Medicare to the entire population. Sanders and the other lawmakers have pointed to Canada, France, and other countries with socialized medical services as inspiration for the legislation.

Research from the Commonwealth Fund has repeatedly found that Americans suffer worse healthcare outcomes despite paying more for their care than citizens in any other industrialized nation.

The biotech industry justifies high drug prices by claiming that their research and development costs billions and that they are in the business of saving lives. But independent researchers have repeatedly debunked the industry’s figures and pointed out that in countries with stricter price regulations, pharmaceuticals are significantly cheaper.

Developing drugs, while expensive, has shown not to be nearly as costly as the industry claims.

Addressing "large markets" more profitable

In its advice to clients, Goldman Sachs acknowledges that while saving lives is an admirable goal, it has traditionally been more profitable to save the lives of people suffering from common and chronic diseases.

For genomic medicine to be as profitable as therapies of yesteryear, Goldman Sachs proposes that the biotech industry “address large markets,” such as Hemophilia, a disease that the firm says is worth up to $10 billion and “growing at ~6-7% annually.” The firm also suggests that companies address disorders “with high incidence” or that the biotech industry simply cure previously incurable diseases through “constant innovation and portfolio expansion.”

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