Thanks to Paul Howard for pointing me toward "The Long Term Bullish Case for Pharma," published back in August by biotech VC Bruce Booth.
Booth outlines three solid arguments for bullishness: First, it's a rich world--growing richer, at least in many countries--and rich people want more medicine; second, people are living longer, and the longer we live, the more we consume medicine; and third, drugs are a relative bargain--despite well-publicized episodes of pharmaceutical sticker shock, a pill is usually cheaper than a stay in the hospital.
Good reasons all, but we might immediately note: These three conditions have been in place in the recent past, and yet as we all know, the pipeline of new drugs and devices has been drying up over the last two decades. Indeed, Pharma companies are laying off, and spinning off, their researchers. So what evidence can we point to that tells us that the drying-up/downsizing trend will reverse itself any time soon? Or at all?
One answer, of course, is that things move in cycles. Another answer is that a bad trend can't go on forever, because if it's a bad trend, well, people will intervene to stop the downwardness, and even reverse it--that's another way of saying that things move in cycles.
But of course, things don't always move in cycles--sometimes they "move," if that's the right word, in troughs. That is, there's little or no upward movement at all. In economic terms, we can recognize troughs in the form of "liquidity traps," as seen in the US in the 30s, or in Japan over the last two decades--and maybe in the US, now, too.
In scientific terms, we can think of "punctuated equilibrium," as another kind of trough. Punctuated equilibrium, of course, holds that progress--in the scientific and technological realm as well as in nature--is not a steady upward curve, but rather, a step-like progression, if we're lucky. As an example of punctuated technological equilibrium, we can note, for example, that commercial aviation has shown little increase in jet speed in five decades; indeed, if one factors in the now defunct-Concorde, jetliners move slower today than they did 35 years ago. So we can never know for sure when we are on the horizontal part of the step, or how long we will be stuck on the flatline.
And in historical terms, we can think of the Dark Ages in Europe; more recently, other civilizations have faced similar long troughs of stagnation and even decline, e.g. China, India, and the Arab world. One needn't be Spengler to realize that civilizational advancement is not a given.
Today, it certainly would appear that the domestic forces that have conspired against medical progress in recent decades--including, but no limited to, the usual suspects, namely, trial lawyers and regulators--have their foot firmly on the neck of medical progress and have no intention of letting go. And with apologies to Newton, we can say that a foot at rest tends to remain at rest.
Moreover, mindful of the historical truism that all great historical events have multiple causes, we should also say that other forces stand in sturdy opposition to Pharma bullishness. One such is the static-analysis fiscalist mindset that dominates Washington, which holds that money saved on "healthcare" in the short run is all that matters, ignoring the larger costs of such "savings" to society as a whole. And another negative force is the strange but enduring alliance between libertarians and greens that leaves our politics with a sense of fatalism, even nihilism, about even the idea of advancement stemming from public-private enterprises. NASA has been one victim of this libertarian-green alliance; the medical industrial complex has been another. Until someone figures out how to obviate even the most streamlined FDA, as well as widespread clinical trials and legal liability, medicine will always be a res publica--a public thing. So the libertarian dream of totally privatized medicine is just that--a dream. And in that case, it will be necessary to focus on reinventing the public-sector role in medicine.
In the meantime, in the real world, when will this wide-array phalanx of opposition to medical progress disappear in the US? Good question. Whoever can answer that question will, indeed, also have the answer to the question of when the Pharma bull market starts.
Of course, we should note that while these doleful conditions apply to the US, and also to Europe, there's no law that says that the rest of the world must be so shortsighted. Indeed, the ROW--most obviously, the rising countries of Asia--might well conclude that the self-strangulation of the Pharma sector is one more bad idea not to import from the West.
So the Pharma bulls could be running soon, somewhere.