When speaking with clients about their pharmaceutical holdings, I consistently hear dissatisfaction concerning the cost and structure of drug development. First, there is dismay over the astonishing cost of some newly developed drugs. Second, there is dismay over the seemingly automatic utilization of more and more drugs as wellness solutions are rarely offered or implemented. Third, there is dismay over the inability to generate better drug outcomes with less side effects.
In a sense, all of this disappointment is rooted in the pharmaceutical industry's outsize success in treating certain problems, particularly within infectious diseases. As a result of this success, the general public was willing to try more treatments, the medical community was willing to prescribe more treatments and the investment community was willing to fund more treatments.
The unintended consequence has been to lose sight of what gains are likely to make against various forms of disease. For example, Alzheimer's is a truly awful disease and affects almost everyone by debilitating someone they know. Yet, my reluctance to grant that brain science is even close to solving this problem has prevented some monetary and reputational losses (so far).
My broad takeaways after years of investing within this sector are: 1) the body is much more complex than any of us imagine, 2) wellness practices will continue to generate the best ROI, 3) specific areas of pharmaceutical success are knowable when the mechanism is clearly understood and 4) a diverse pipeline of consumer-like but medically proven drugs is the most investable approach.
