A few weeks ago, some analysts at Goldman Sachs brought out a report titled, ‘The Genome Revolution’, about bio-tech startups that are on the verge of discovering cures for various chronic illnesses. Under normal circumstances, such a report would not have caused much of a flutter — after all, Goldman Sachs and their ilk are always putting out industry and sector-specific analyst reports for their clients — but this one did. All thanks to a very provocative question that the report asked. ‘Is curing patients a sustainable business model?’ And of course, the report went on to answer in the negative.
While it expectedly prompted sniggers about the heartlessness of investment bankers, and thought pieces about the perils of capitalism when applied narrowly like it was in the Goldman Sachs analysis, the analysts did make a good point. Genome-based medicines are one-shot cures for chronic diseases. People suffering from such diseases are the customers for companies that manufacture such one-shot cures. Once the cure works, they stop being their customers. And very soon, as more and more patients start getting cured, the company will start running out of patients or customers who can pay. This is not just a hypothetical scenario. It did happen with Gilead Sciences, who developed a one-shot cure for Hepatitis C, made nearly 13 billion dollars in 2015, but only around 4 billion dollars this recently-concluded financial year.
The analysts’ suggestion to startups aiming to come up with such one-shot cures is to focus only on ‘popular’ diseases, which essentially have a lot of sufferers and hence customers. Or to constantly keep coming up with a new one-shot cure for a different disease fairly frequently. For the problem at hand, I think they are logical, but solutions that are impossible to agree with. Research into medical science is one of those things where it is imperative that public funds support it, and the results from such research are used for the good of all.
However, if you abstract out the suggestions given by Goldman Sachs, it is useful advice for most startups. The first suggestion is a lesson in prioritisation. Measuring market size, or the number of potential people who will use your service or product, is a great way to decide what product you release first over some other. In fact, many times, it is often what decides what business sector a startup decides to venture into. The second suggestion is an exhortation to innovate constantly, and that can never be bad advice for a startup. And if your startup wants to be part of health tech or research, it might just be the greater thing to do, if you leave the discovery of medicine to publicly-funded entities not under any patent regime. There are enough problems for a startup in this field to solve without having to pour money into finding one-shot cures.
The author heads product at a mid-sized startup in the real estate space
