The Cost of a Cure đź’Š

by 1 Jul, 2020

The Cost of a Cure

The price of human life; 3,120 USD. That’s what world governments will pay Gilead Sciences for one single patient’s remdesevir treatment.

Martin Shkreli vibes, anyone? Tough on the uninsured, the drug costs ten bucks to manufacture, it isn’t a cure; capitalism at its finest you might say. But Gilead’s been giving all its remdesivir away for free until now, and main street investors are still waiting to profit from the drug. The stock is up on expectation alone.

It will go up more if a vaccine is slow coming. It will go down if remdesivir’s been overproduced; only 2% of the world’s ten million infected have had a go on remdesivir, but Gilead is producing enough vials for 20% of the world’s infected. The drug isn’t free anymore for poorer countries, remember, so this stock has to be a bet on a second wave.

The other moving part here is competition and rival treatment candidates. There are hundreds; dexamethasone (a cheap steroid) has recently been found to stop coronavirus deaths, and on that, remdesivir’s pro-forma price crashed. It had been closer to $4,500. 

This doesn’t bode well for Gilead. It might not have any Covid-era competitive advantages. As Warren Buffett would say, “it might have a shallow moat,” or perhaps that’s not important when demand is this high!

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