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Pharma’s Big Fail! The Payoff Ahead for You

Monday, April 10, 2017 12:10
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This post Pharma’s Big Fail! The Payoff Ahead for You appeared first on Daily Reckoning.

“Thank God it’s Gottlieb!”

That’s what one analyst exclaimed after Trump nominated Scott Gottlieb as the new head of the FDA last month.

Gottlieb is expected to upend protocol the FDA has followed for years. That includes loosening requirements for drug approval and more flexibility in clinical trials for drugmakers.

If the promises stick, that could mean big money for pharmaceutical companies — and huge profits for investors.

That’s because Gottlieb’s changes would allow for faster drug production and more drug innovation. This means faster profits for drug manufacturers. And that means big gains for your biotech portfolio.

The nomination of Gottlieb — and changes to the FDA — could solidify Trump’s legacy as the 45th president of the United States. In fact, our latest research suggests the lifesaving impact of the policies that could come from this decision could make Trump a legend.

This is considered a big win for the biotech sector. Stay tuned.

Below, Ray Blanco explains why a big mistake in part by the pharma industry could mean huge profits ahead for you.


Amanda Stiltner
for The Daily Reckoning

Pharma Fail! But the Payoff Is Huge

By Ray Blanco

Free markets are supposed to be the best way to satisfy every consumer demand…

And there are few products for which there is greater demand than those that save lives and improve health.

Life and health are basically what the pharmaceutical industry sells. From acne-free skin to unclogged arteries, pharma’s focus is on the drugs that keep us alive or make our bodies a bit more livable.

But as we all know, the pharma market is far from free. It’s regulated to the hilts, which means that a lot of potential avenues for solving some of our most pressing health care problems aren’t explored.

There’s simply not enough profit in some areas for Big Pharma to pursue.

Drug developers must make allowances for risk in a world where resources are limited and allocate those resources to where they stand the best chance of generating a return.

One big fail in the pharmaceutical market is in antibiotics. It was once a huge area of pharma research and the source of a steady stream of new drugs… but it’s been neglected for years.

As a result, it’s become harder to find new drugs that tackle bacterial infections, and pharmaceutical companies have focused efforts elsewhere.

This is a huge problem. A cancer drug can work as well as it did the day it was first brought to market — even if that was decades ago.

Antibiotics, however, lose their efficacy over time, because bacteria evolve resistance. Once that happens, we go back to a time when people died from something as innocuous as an infected scratch.

For many years, we have overcome this problem because we’ve discovered enough new antibiotics to stay one step ahead of evolving bacterial resistance.

But we’re still overprescribing old antibiotics like they’re party favors.

Plus, we’ve had a dearth of new antibiotics for many years. It’s become harder to find all-new antibiotics. And another trick, slightly modifying the chemical structure of an existing antibiotic, has yielded diminishing returns.

Thus, the rate of discovery, development and commercialization of new antibiotics has fallen off a cliff.

Pharmaceutical companies have determined that the returns aren’t worth the costs and the risk of failure.

This means the bad old days from before penicillin are coming back. In those times, people could die from something as simple as an infected scratch — and many did.

But people in power have noticed the problem. Congress has introduced FDA reforms to ease the development and improve the returns for pharmaceutical companies that develop new drugs that save lives by killing the microbes.

It couldn’t come at a better time. On the current trend, we’re on track to have more people dying from “superbugs” than cancer by 2050.

But this huge problem is also a huge profit opportunity for problem solvers.

As is often the case, it’s been small pharmaceutical companies that have moved first and fastest to take advantage of the new opportunity. There’s the potential for big near-term gains in small players moving to solve the problem of nightmare bacteria.

If you’re a biotech investor, you should have an antibiotic player in your portfolio right now.

To a bright future,

Ray Blanco
for The Daily Reckoning

The post Pharma’s Big Fail! The Payoff Ahead for You appeared first on Daily Reckoning.

This story originally appeared in the Daily Reckoning . The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.


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