Got Cancer? Sorry, There’s No App for That
That’s right. I hate to be the bearer of bad news, but there are no apps for treating Parkinson’s either. Or ALS. Or Alzheimer’s, or one of a large number of other diseases I could name and you don’t want to have. Numerous pharma and biotech companies have created more than a hundred different apps, but none of them are going to cure you. They simply provide patients or healthcare providers with product information or tools for tracking disease status or drug compliance. And unless current trends reverse themselves, there may be fewer new investments to find treatments for any of the diseases mentioned above in the foreseeable future.
Why? Because developing new drugs takes a long time and costs a lot of money, an outlay that is said to be doubling every six years. As a result, the pendulum appears to be swinging away from investing in the riskiest, early stage sector of this industry. The situation is even worse for so called “neglected diseases.” Investors who are looking for yields beyond those available in the equity and bond markets often look at start-ups, hoping to get in on the ground floor of the next Apple or Amgen. Despite this, a recent report on venture capital investments in biotech startups revealed a precipitous decline in early stage investments in these companies.
Why are VCs turning away from putting money into early stage biopharmaceuticals? The most likely explanation: they’ve had a difficult time making money in this sector over the past decade. There’s a limited pool of investment money, and many VCs can put these funds to work in one of the more highly favored industries these days, such as software development. Opportunities include mobile phone apps, social media sites, and cloud computing and backup solutions.
I can see the attraction of investing in these areas. A couple of caffeine-fueled programmers toiling away in a cut-rate workspace can crank out the code for a software project in a few months. If it works out, terrific. And if it doesn’t, the expense wasn’t great, they’ve “failed fast,” and it’s time to move on to the next investment opportunity. Let’s keep in mind, however, that funds poured into developing the latest smartphone app is money that’s not going towards developing treatments for cancer or other serious diseases.
There’s nothing inherently wrong with creating software products. The work is a decent way to make a living, pays a very good salary, and provides value to customers. A venture capitalist’s primary focus is making money, and if I were one of them, I’d probably be putting money into this sector as well. However, as Christian Chabot, CEO of Seattle-based Tableau Software, recently observed “One of the great tragedies of the modern technology industry is that a majority of the world’s most brilliant and talented people, many of them computer scientists, have spent the last 15 years working on projects that are primarily about getting people to click on more ads, or put more stuff in their shopping cart.”
Many people believe they can’t live without the latest app or gizmo, but their views on what matters most are likely to change rapidly when they get bad news in the doctor’s office. The total amount spent in the U.S. each year on biomedical research (which includes drug development) appears to be dwarfed by what is expended on developing software. In 2004, U.S. businesses spent around $250 billion on software development, far greater than the approximately $100 billion spent on all biomedical research (not just drug development) by government and industry groups combined in 2007. And with all due respect to the programming gurus, creating new drugs is a significantly more difficult (and expensive) undertaking.
While both software and genetic engineers need top of the line computer gear, lab researchers also need a significant amount of expensive equipment and consumable supplies. Biology is one of the most complex fields imaginable and there are no shortcuts. Genes and the proteins they encode must be examined in great detail, preferably on both a case-by-case basis as well as a systems biology approach. While it is relatively easy to fix mistakes in computer code, there is, as yet, no reliable way to repair errors in the genetic code (i.e. DNA) that are frequently found within the cells of patients.
I’m not saying that programming isn’t valuable to the general public. In fact, achieving success in cutting-edge genomics research these days is going to depend on having excellent software to analyze the Big Data that is rapidly accumulating in our server farms. It really comes down to the choices we make as a society and what we value most. Do we really need more variations on FarmVille and Facebook? Wouldn’t we be better off … Next Page »