I get lots of Wall Street research, but the title of this Citi report seized my attention: “Immunotherapy – The Beginning of the End for Cancer.” First, a few background facts from the piece:
1. Cancer accounts for one in four deaths in the developed world, making it the second leading cause of death.
2. The risk of an individual in the Western world developing cancer is a staggering one in two.
3. Given its prevalence, cancer is also very costly, with an estimated economic cost in 2008 in just the US of $200 billion per year, including $80 billion for health care costs.
Now here’s the potential good news:
We believe that in 10 years immunotherapy [ which leverages the patient’s immune system to eliminate or slow the growth of cancerous cells] will likely form the backbone of 60% of all developed world cancer management regimes, driven by a paradigm shift in the overall improvement in survival rates in responsive patients.
This represents a potential revenue opportunity for the biopharmaceutical industry in excess of $35 billion by 2023 — exceeding the peak market value of previous mega-blockbuster classes, such as cholesterol-lowering statins.
We anticipate the emergence of these new immunotherapy molecules will have an equal or even greater impact on the management of many cancers than drugs such as Herceptin and Rituxin have had on breast cancer and B cell malignancies, respectively.
Hope Citi is right. The benefits from medical innovation can be tremendous. For instance: A 1999 paper from the University of Chicago’s Kevin Murphy and Robert Topel made the following estimates:
The historical gains from increased longevity have been enormous, on the order of $2.8 trillion annually from 1970 to 1990. The reduction in mortality from heart disease alone has increased the value of life by about $1.5 trillion per year over the 1970 to 1990 period. The potential gains from future innovations in health care are also extremely large. Eliminating deaths from heart disease would generate approximately $48 trillion in economic value while a cure for cancer would be worth $47 trillion. Even a modest 1 percent reduction in cancer mortality would be worth about $500 billion.