Forbes: Make money from pharmapsychiatry's downfall

[Altostrata]

You know the tipping point has been reached when you can make money betting against psychiatric drugs. "Psychopharma is looking like an idea whose time has passed."

 

Investing For A Backlash Against Psychopharmacology

Jul. 19 2011 by Christopher Faille Forbes.com

 

Among the public, scholars and within the medical profession, a backlash has developed against the widespread use of psychoactive drugs. This backlash will help define the biotech and pharmaceutical industries in the coming years, because it means over time a shift in opportunities and capital away from a search for the next psychiatric blockbuster toward solutions to more tractable human troubles that arise outside of the central nervous system.

 

Eli Lilly’s (NYSE: LLY) Prozac is perhaps still the most cited instance of a real or alleged psychopharmacological breakthrough. It is an anti-depressant, the result of laboratory research conducted in the 1970s, approved for sale in the U.S. by the FDA in 1986. By 1990, it was not only the most widely prescribed anti-depressant in the U.S., it merited a Newsweek cover story.

 

The corporate history of another much touted drug, Adderall, is more complicated. Adderall, a stimulant used to treat both ADHD and narcolepsy, and for various off-label purposes, was once exclusively associated with Shire Pharmaceutical (NASDAQ: SHPGY). Shire no longer produces the instant release (IR) form of the drug. It sold those rights years ago to Dura Pharmaceuticals, which was in turn acquired by Teva Pharmaceuticals Industries Ltd. (NASDAQ: TEVA).

 

Last year, Basic Books published The Emperor’s New Drugs, by Irving Kirsch. Kirsch is himself no outsider to the world he is critiquing here. He has spent decades in the discipline of psychology since receiving a Ph.D. therein, in 1973, and has been at work on the subject of this book since 1998, when he and Guy Sapirstein co-wrote a meta-analysis of the effects of antidepressant medicines that they rather jauntily called “Listening to Prozac but Hearing Placebo.”

 

In The Emperor’s New Drugs, Kirsch says that he and Sapirstein were “cautious in our interpretation of the data” back in 1998. They were, despite that title, too kind to the hypothesis that the drugs under examination actually did have therapeutic value that a placebo could not duplicate. Since then, though, “the process of addressing the objections of my critics has steadily driven me to a set of much more far-reaching conclusions.”

 

“In the long run,” he now believes, “psychotherapy is both cheaper and more effective” than chemical therapies, “even for very serious levels of depression.”

 

Also last year, Crown Publishing came out with a book on much the same subject by journalist Robert Whitaker. Whitaker’s tone in Anatomy of an Epidemic (2010) is angrier than Kirsch’s. While Kirsch focuses on the good that psychoactive drugs seem to do, and finds that only the patient’s confidence in the healing power of the pills actually does that good, Whitaker focuses on the harm that he contends such pills do.

 

He believes that the rush to prescribe pills is behind the fact that the “number of disabled mentally ill has risen dramatically since 1955, and during the last two decades, a period when the prescribing of psychiatric medicines has exploded, the number of adults and children disabled by mental illness has risen at a mind-boggling rate.”

 

In June, Marcia Angel reviewed both Kirsch and Whitaker in The New York Review of Books – so sympathetically that she must be considered a member of the same choir – and she is no stranger or philistine, but the former editor in chief of the New England Journal of Medicine.

 

Meanwhile, the drug companies themselves have been dropping or reducing research into fields that once looked promising. Daniel Cressy, writing about this in Nature last month, was mournful in tone: “Many people affected by mental illness are facing a bleak future as drug companies abandon research into the area and other providers fail to take up the slack,” he says.

 

My own suspicion is that his tone is misdirected. For those for whom the future is bleak, it is bleak because the critics are right, and the drugs really don’t do anything valuable, which is to say the bleakness arises because the research program has continued in a misguided direction for far too long.

 

But even if the pull-back Cressy notes is just a response to the change in cultural climate, it would mean development of improved treatments of diabetes or multiple sclerosis has just become an easier ‘sell’ on every level than further research on depression or schizophrenia, as the human mind stubbornly remains a Black Box.

 

....psychopharma is looking like an idea whose time has passed.

 

 

http://blogs.forbes.com/greatspeculations/2011/07/19/investing-for-a-backlash-against-psychopharmacology/

[summer]

Interesting... I think I'll call my stockbroker.

[alexjuice]

'Cause I'm so flush with investment cash

 

This is actually a good idea, if you know what you to look for. The downside is that Big Pharma isn't big PsychoPharma and diabetes and cancer drugs etc aren't going away.

 

I'll look into it. My gut is that Bristol-Myers would be the best one, but I'd need to look into it more.

 

Ahhh, the hell with it...

 

Just for fun, let's bet against Bristol (BMY).

 

I just bought FIVE BMY JAN 13 $30 PUTs (with monopoly money) @ $4.55 so total cost = $2,275.00

 

It'll be interesting to see how they do. The stock is at $29 (or so) right now so if it goes up, I will lose money. If it goes down, I will make money. I'll watch...

 

alex.i

[Altostrata]

alex, how about Pfizer? For example, Pristiq should go down the toilet -- for sooooo many reasons.

 

Too bad there's a shortage of name-brand antidepressants now, as they all go generic. How about a generic manufacturer that's making a lot off antidepressants?

[cinephile]

Key quote:

 

...psychopharma is looking like an idea whose time has passed.

All I can say is: this is such sweet vindication. It's almost surreal to see this all happening. I honestly thought I wouldn't see the day. But I also have some very mixed emotions, as in hindsight I was (and I think I can speak for others on this board) simply taken advantage of by an obscenely profitable pharmaceutical fad. At least in my case, it really was/is that simple.

 

Thanks for this item Alto!

[alexjuice]

alex, how about Pfizer? For example, Pristiq should go down the toilet -- for sooooo many reasons.

 

Too bad there's a shortage of name-brand antidepressants now, as they all go generic. How about a generic manufacturer that's making a lot off antidepressants?

 

Pfizer's drugs may suck but the word may already be out. I don't foresee Pristiq having a huge impact on the bottom line. I'd have to look. Predictions like this depend on much, largely how dependent a company is on its blockbusters, their patent situation and then if there big sellers are even psychiatric meds. And, honestly, one should do thorough research before investing because there are all the other factors which affect share price. This is just for fun.

 

I don't know much about how the generics run their operations. I'd have to look into it. They might be promising in this regard...

 

I choose Bristol-Myers basically for two reasons. The main one is that theyt've been banking on abilify (which it shares with a foreign corp) and the sales are already starting to slip. I think they'll slip further...

 

Abilify is under patent for another several years. And sales are, at this point, almost equal to earnings (based on my first-pass analysis). It costs $.005 to make a pill and it's sold for $10... (i'm making numbers up but you know my point). So if they do $600mn in abilify sales each quarter, how much of the $600Mn is pure profit? A lot. Gross profit for the entire corp, for last year, was $12Bn (before taxes, and all other accounting reconfigurations) and the net income (actual profit) was $3.33Bn. So abilify revenue is expected at $2bn+... well that might be close to $2bn of the profit... at least if the Seroquel numbers are indicative of the profitability of under-patent antipsychotics.

 

Also Plavix is going generic so I figured, what the hell... bet my monopoly money against Bristol-Myers?

 

I don't know about their pipeline, but their best two (Plavix & Abilify) seem on shaky ground.

 

Here's the list of top revenue producing medications. Or at least A list, I am doing this research on the fly and I'm just assuming stuff is right on first pass -- usually a good idea to double check your numbers.

 

The one downside to all of this is that Pharma corp's pay large dividends so there's a pretty hard bottom (assuming business doesn't collapse to the point that they slash the div) on how far the stock will drop independent of a non-company related event like another broad market meltdown.

 

Also, I'm not an expert on the industry. I wouldn't trust my assumptions. I'd do a lot more work before I bet my real money. Didn't Robert Whitaker analyze pharmaceutical firms? He'd probably have a decent idea on this... Of course he would not participate in the market in this way. It would really undermine his argument if he was discovered shorting the pharmaceutical stocks and such activity could possibly be construed as securities fraud.

 

...

 

There is probably a really juicy -- smaller, less diversified company that's primarily involved in mental health Rx -- that really would be a great way to bet against psychopharmaceuticals. Anyone wanna go find that company?

 

Alex.i

[Altostrata]

Takeda?

[alexjuice]

Just for fun, let's bet against Bristol (BMY).

 

I just bought FIVE BMY JAN 13 $30 PUTs (with monopoly money) @ $4.55 so total cost = $2,275.00

 

It'll be interesting to see how they do. The stock is at $29 (or so) right now so if it goes up, I will lose money. If it goes down, I will make money. I'll watch...

 

alex.i

 

Update on my bet:

 

Well, making money ain't easy. BMY is up to $32.5 and the PUTS I bought will expire in a few weeks.

 

As indicated above, I spent $2,275.00 on Bristol Myers Squibb PUTS which would increase in value as BMY dropped below $30. The farther the stock depreciated, the more money I would make.

 

Since BMY is nearly 10% higher than the $30-break even, m PUTS are only worth a piddling $65. Barring a sudden collapse in stock price, they will expire worthless in a few weeks. My hard-earned monopoly money, gone!

 

Making money from the downfall of psychiatry was not for me in 2012. 2013?

[Altostrata]

Should have bought calls on a generic manufacturer, etc.