Valeant Pharmaceuticals has made a 500+% gain in the last 5 years and I was curious about why.
So why do acne meds make money? For one thing, because the people who use them become lifelong customers. In comparison, cancer meds have not caught up in profit margins as acne meds because of the simple fact that cancer patients often die within 6-8 years of treatment, whereas an acne med patient will often be a patient for life.
Cancer meds and cancer treatments, although they are a trillion dollar industry and are dependent on new diagnoses, and because the majority of cancer patients die within 8 years, it means that profits eventually do not generate lifetime customers as the meds for acne and other dermatological conditions
However, if we take an example of a company that specialises in autoimmune diseases, these people become customers for life, therefore elevating the bottom line.
For a long time, I was really angry that this had happened to him. He and I had the same family doctor, and our doctor was far from evil. He was someone I had known since I was 10, who had treated my entire family. But when my best friend died, I made a life changing realisation: I realised that doctors weren't gods. This was a very important realisation for me, because before, I believed everything doctors always told me, and believed blindly that whatever they recommended automatically made things better.
I sometimes wonder what it would've be like if my friend were still alive? What if he never took those experimental cancer drugs? What if he had fought the cancer on his own, and let his own immune system destroy the skin cancer on his back? Would he still be alive today?
In comparison, what has been the history of healthcare in the United States? It has been a series of abject failures- of citizens declaring mass bankruptcy at the face of overwhelming health costs, deterioriating health for all, and abject ignorance of disease conditions. In the United States, Obamacare has become nothing but a fallacy to the concept of universal health care, and acts as a method to increase profit margins over a short period of time. Healthy people must pay an extraordinary amount to have simple benefits of health care, and sick and poor people are forced to declare bankruptcy to get the health care that they need. Is this the model that the UK would like to follow when funds for the NHS expires in 2020?
The United States, would begin their anti-slave crusade nearly 70 years later from 1775 when the first abolition society would appear in Pennsylvania to the banning of slave trade trips in the Slave Trade Act of 1794.
Whilst British women wrote numerous essays and articles about the ethics of the slave trade and a need for abolition in the 1800s, women such as Julia Gardiner Tyler, the 2nd wife of President Tyler (and the historical source for the character of Scarlett O'Hara in Gone With the Wind) wrote very eloquent essays defending slavery. The daughter of a plantation owner, whose wealth and livelihood depended on slave labour, Julia Gardiner Tyler naturally defended her entire family's heritage. What she says is interesting though; she said that slaves were better treated as slaves than if they were left alone to live their own lives.
Meanwhile, the UK had done something completely different. After the World Wars, they integrated a system known as the National Health Service, or NHS. Rich or poor, race or gender aside, people had a right to health care. I wonder what would happen if the UK decided to follow the US in their approach in health care post-2020? In history, the UK typically sets the precedent, however in the post-modern era, many Labour Party leaders have instead, embraced the tactics of the American strategy for short-term profit margins at the expense of the population at large (eg, Tony Blair)
We have to remember that at one time, slavery was a large percentage of England's GDP until the courts dictated in 1706, that all men were free once they landed in England. How brave must that decision have been to go against conventional morals and prejudices? And how brave was it to set a precedent for the US to follow 157 years later?
CB Insights, often makes fun of people for being "wantrapreneurs": people who are primarily interested in becoming billionaires than entrepreneurs per se, and often have "get-rich quick" schemes or perhaps even have ambitions of creating wealth out of the suffering and exploitation of others, often at an extravagant burn rate. I even think that perhaps this wantrapreneur model has been elevated in the media by Hollywood, a sector I am quite familiar with that celebrates exploitation.
My hope is that all entrepreneurs, such Sir John Holt and Abraham Lincoln, have the courage to do the right thing, even if it only begins with an idea and goes against the status quo.
And I wonder, which are the UK and US startups that will disrupt the global medical and pharmaceutical models of profit in our current era?
By Sierra Choi
DISCLAIMER: This post was not intended for any stock advice and for educational purposes only