Free Markets, Great Needs and a Medical Paradox We’re Watching

Why things happen can be more revealing that what is happening.

You’ve seen many trends change the world, and invested in a few of them, no doubt—the Internet, genomics, coffee pods…and now AI.

But some huge trends don’t pay off. Two that come to mind are global warming and antimicrobial resistance. And don’t say, “but EV’s.” The top two reasons consumers buy EV’s is for cheaper fuel and lower maintenance costs. No one is investing in an anti-global warming company that pulls carbon dioxide out of the air or pumps ozone into the stratosphere.

Why don’t some important trends attract investment?

One reason—especially for global warming—is that a lot of people don’t believe it really exists. The same neighbor who tells you he can now grow a tropical tree in his yard that would have been killed over winter 20 years ago will turn around and tell you there’s no climate change because, darnit, it was blasted cold in his zip code yesterday.

Another reason that some trends don’t attract investors—this applies to antimicrobial resistance—is that we don’t think about them much at all.  Most of us know that there are “superbug” bacteria that defy antibiotics. But here at 21st Century Trader we’ve never had anyone ask us if we know any good anti-microbial-resistant (AMR) stocks.

As global trends go, it doesn’t get much bigger. Resistant bacteria like MRSA, VRE, and drug-resistance tuberculosis are so common that they caused 1.27 million deaths in 2019 by official count. The World Health Organization estimates that 14 kinds of resistant bacteria killed 513,414 people last year. By 2050, AMR’s will likely be the second leading cause of death, just behind ischemic heart disease.

Why do we spring for coffee pods, Internet, and genomics but not AMR investments?

Humans love progress and hope, so we envisioned great things for the Internet and genomics. We even expected better coffee. It’s exciting to invest and become part of the future.

But Global warming and resistant bacteria are negatives. They’re not things we hope for. And we’d rather not think about negatives.

Still, you’d expect that any drug that could solve a problem as pressing as AMR would benefit from billions in investment dollars and companies rushing to beat each other to the first breakthrough. It’s not happening.

This is one of the soft spots in the beauty of free markets. Investments flow where profits dangle. No matter how great the need, if there’s no clear profit to be made, then foundations, philanthropists, nonprofits, and governments have to foot the bill, or no one does.

Beating AMR may be far more important than a better Keurig, but solving that problem hasn’t made as much money as giving the world bad coffee.

As Politico pointed out in a recent special report, it takes 10-15 years to develop a new antibiotic and at least a billion dollars. Achaogen spent 15 years developing a promising new antibiotic that finally got FDA approval in 2018. The next year, the company only sold $800,000 in product and went quickly to bankruptcy.

Despite the financial hurdles, according to WHO there are nearly 100  programs working on the AMR problem. Some day, one of them is going to pay off.

Inventors aren’t always good marketers. Some say that 400-600 companies went bankrupt building cars in the early 1900s. Then there was Ford.

If there’s a Ford in the bunch looking for better antibiotics, it will prosper. We’re watching so you’ll hear about it here.