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Brendan Shaw

Alzheimer's failure a lesson in why pharma companies are vital


News that a joint research project by pharmaceutical companies Biogen and Eisai to develop a new drug to treat Alzheimer's Disease has been stopped is a lesson in why we need pharmaceutical companies to help improve global health.

The drug itself has failed.

Both companies have announced that their clinical trial into the drug, aducanumab, to treat plaques in the brain as a treatment for Alzheimer's Disease has been halted after the trial's independent monitoring committee determined that the drug didn't work.

As a result, Biogen's share price 'plummeted' by 29%, meaning the company lost US$18 billion in one afternoon.

The drug and the companies join a long list of failures in Alzheimer's treatment.

After some initial promise, the trial has joined hundreds of other clinical trials where potential Alzheimer's treatments have failed.

The key thing here is that it's the the private sector that has taken the risk in this failure of innovation.

It's the pharmaceutical companies and their investors that wear the risk here.

It's not the taxpayers, governments, patients, NGOs or activists who have borne the financial cost of this trial to find a cure for Alzheimer's Disease.

It's the investors in the companies that saw their shares drop in value by up to 29% in one afternoon.

These sorts of stories don't often feature in arguments about the role of pharmaceutical companies in global health.

But they should.

We don't usually see governments, payers, insurers, NGOs and activist groups rushing to help pharmaceutical companies and their investors when the companies take a financial bath after taking a chance on a new drug that may help treat patients.

And it's not as if this is a rare occurrence.

If you spend any time reading the industry news, you'll regularly see stories of large and small biotech and pharmaceutical companies seeing their share prices tank after a drug has failed in clinical trials.

The critics of the life sciences industry usually only focus on the 'successes' and the profits from those successes.

The failures, like this one, are ignored.

Usually, these failures either aren't acknowledged or are seen as someone else's problem.

That approach is fine provided that when companies are successful they get the appropriate rewards for the value their medicines bring.

The good news is that because companies like Biogen and Eisai have been commercially successful in the past and have sufficient cash reserves, they can afford to carry the costs of a failure like this.

Because they've been profitable in the past, the companies have the ability to wear such disappointments in research.

While the broader system of private sector investment and innovation is not perfect - and there's certainly things that need to change - it's this system that has helped give humanity thousands of new drugs over the last half century that treat a range of diseases.

And that's something that deserves more recognition than it usually gets.

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