Written in November 2017 and May 2018, blog posts by Dr. Kelvin Stott, Director of Portfolio Management at the Novartis drug company in Basel, Switzerland, caused widespread alarm among pharma investors. Asserting that the entire pharmaceutical industry is “on the brink of terminal decline,” Stott described how research and development (R&D) returns in drug development now stand at just 3.2 percent and could potentially reach zero by the year 2020. To put it simply, this means that each dollar spent on R&D by drug companies would merely result in an income of a dollar. In other words, the pharma industry would no longer be a profitable concern. Significantly, therefore, according to business website Forbes, Stott’s data “correlates with the observation of virtually every serious researcher who has looked at the industry.” The implication of this is that the beginning of the end for the ‘Business with Disease’ may soon be in sight.
Acknowledging the failings of the pharma business model, Stott explains how it depends on a positive return on investment. This confirms what Dr. Rath and our Foundation have been saying for years now, namely that the pharma industry isn’t a health industry, it’s an investment industry driven by the profits of its shareholders. Describing how the return on investment in pharma R&D is rapidly declining, Stott states that the reasons for this include decreasing success rates in new drug development, rising clinical trial costs, a tougher regulatory environment, and increasing competition from generic manufacturers who disruptively make cheaper copies of existing drugs after the original patents have expired.
Putting all this together, Stott predicts that falls in the average return on investment will result in the entire pharma industry beginning to contract within the next two or three years. By the year 2040 the annual value of the industry’s total global sales may have fallen back to what it was in 1990. This would represent a catastrophic reduction in revenue of around 90 percent. Tellingly, therefore, Stott describes the pharma business model as “broken,” adding that it is “entering a vicious cycle of negative growth and terminal decline as its fundamental business model has run out of steam.” He concludes that the industry “will not be around forever” and that it must “adapt or die.”
Revealingly, when emphasizing the desperate nature of the situation that drug companies find themselves in, Stott states that the pharma industry needs “a major breakthrough right now, in 2018.” Even then, however, he says it would still face “a period of significant contraction before any recovery,” and that “anything less [than an immediate breakthrough] would be too little, too late to save the industry from terminal decline.”
Ultimately, of course, given that drugs don’t address the root causes of diseases, but only their symptoms, the major breakthrough that pharma investors are hoping for will not occur. Assuming therefore that Stott is correct in his analysis – which, as Forbes says, “correlates with the observation of virtually every serious researcher who has looked at the industry” – then a major rethink in the design of our current healthcare systems could soon be just around the corner.
The science to support such a revolution, in the form of nutritional and Cellular Medicine therapies, is already in place. Based on these science-based natural health approaches, which directly focus on the chronic deficiencies of micronutrients that are the root causes of chronic diseases, major killers such as cardiovascular disease, cancer, diabetes and others could soon be brought under control. The terminal decline of the pharma industry thus has the potential to become the trigger for implementing a truly preventative system of healthcare that saves millions of lives. In this respect, it is interesting that, in analyzing the current situation, Stott turns to Darwin’s theory of evolution and suggests that its central principle applies just as much to companies and industries as it does to the species of life:
|“It is not the strongest of the species that survives, nor the most intelligent, but the one most adaptable to change.”
Given that the pharma industry has consistently shown itself to be incapable of adapting its business model to focus on the root causes of chronic diseases, its terminal decline would appear to be inevitable. Far-reaching as the ramifications of this outcome may be, they open the door to our reaching the goal of Health for All and reducing today’s most common diseases to a fraction of their current incidence. It won’t please pharma investors, but the next few years could potentially become the gateway to a healthier world.