Biotech Values

[DewDiligence]

Re: Pharma and The Global Demographic Tailwind

That’s a good article that echoes the point made in a number of posts on this board. Notably, the author of the article understands the nonlinear effects that are strongly bullish for the pharma industry:

As presented in the chart below [see #msg-66564458 for chart], there is a strong positive nonlinear relationship between Pharma spend and GDP… In short, drug spend has an income elasticity of demand greater then one: once consumers or society have covered life’s basic needs, they channel more spending towards premium goods like investments in life extension and better quality of life. Right now, the world, with the rise of the BRIC economies in particular, is becoming wealthier and the resulting rise in income will drive greater pharmaceutical use.

Another nonlinear effect:

As people live longer, demand for more care to keep them healthy will undoubtedly grow, especially treatments for age-related diseases (Alzheimers, AMD, cancer, bone, cardio-metabolic, etc..). This demand is also likely to be non-linear: holding aside the acute care burden of the last couple years of life that will likely still exist, adding 10% more “healthy” living will extend what are the very high consumption years for Rx within healthcare.