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Is Big Pharma Really Trying to Cure Diabetes? We're Seeking Profits and Debunking Myths

Jun. 27, 2011 2:14 PM ETNVO, SNY, LLY, JNJ, MDT, TEVA, BIIB, PFE, OSIR, DMYDY, CVS, RADCQ, BMY, WBA12 Comments
Sean Farhy profile picture
Sean Farhy

There is a saying that there is more money in the treatment of a disease than there is in the cure. There is also a widely suggested conspiracy that pharmaceutical and biotechnology companies refuse to bring known cures to market because they make more money treating the symptoms. Let's not only see if this is true, but also see if we can profit from this through the disease of diabetes.

There are approximately 33 million diabetics in the United States, of which 90% or 30 million have Type 2 Diabetes, also known as Adult Onset Diabetes. Type 2 Diabetes is typically associated with obesity and sedentary lifestyle. The other 10% or three million Americans have Type 1 Diabetes, an auto-immune disease also called Juvenile Diabetes. The treatments for both Type 1 and Type 2 Diabetes often overlap, but the causes and eventual cures of both diseases are completely different. We'll talk about both of them, but our main focus will be on Type 1 Diabetes.

The Big Business of Treating Diabetes:

Insulin is the only known way to treat Type 1 Diabetes. Over the years, treatments have improved with the development of synthetic analog insulins. The major manufacturers of theses insulins are Novo Nordisk (NVO), Sanofi-Aventis (SNY), and Eli Lilly (LLY). Last year Lilly's Humalog generated $2 billion in sales for the treatment of both Type 1 and Type 2 Diabetes. Global insulin sales are now $15.4 billion annually, increasing 400% since the beginning of 2000. Insulin sales are expected to keep increasing exponentially, and it is predicted that by 2050, 20% - 30% of the U.S. population will have diabetes with the increase largely associated with Type 2. United Healthcare estimates that over the next decade the United States will spend $3.4 trillion in costs related to diabetes.


This article was written by

Sean Farhy profile picture
Sean Farhy is a the Head Trader / Senior Equity Analyst for Rhodes Capital Management. Sean Farhy received his MBA from Drexel University in 2007 and has been trading stocks and options for almost twenty years. Sean also writes for Longshortblog.com, a subsidiary of Rhodes Capital Management.

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Comments (12)

Pharma and the medical community reduce the blood levels considered to represent diabetes and now have more people than ever covered by their scam. The claim that the companies would make more money curing a disease is BS. Prove it by giving the diabetic meds and monitoring supplies for free. They make at least $100 to $600 per person out of pocket (not considering insurance payments) which they would lose. Doctors and other medical professionals make money by making diabetic patients come in frequently. A core would affect all of them.
It's been years since this article, but

what if there is NOT $160bil to be made? Would any of the major drug/pharma companies pay the tens of millions of dollars for the trials? No they would not. No matter how promising the research looks, if it doesn't help their bottom line they won't spend a dime on it.

The NIH is spending a pittance on T1 research so good luck getting funding there.

See the Faustman Lab. They have an extremely promising long term treatment process using the BCG vaccine: a generic 80-year-old tuberculosis vaccine shown to completely yet temporarily reverse the disease.

Also, the JDRF, while a non-profit, receives huge amounts of money from big pharma companies. Since their leadership changed a number of years ago, (2006/07?) they have abandoned all research aside from their closed-loop artificial pancreas.
perfect8 profile picture
Sean I have one question. How much money Did J&J make by dumping the stock at it's highest, knowing 2 weeks before everyone else that the trial was not a go?
Let me first explain the differences between islet transplantation and stem cell transplantation.
Islets are not stem cells. They are fully differentiated (mature) cells that we obtain from the pancreas of a brian dead human donor or a pig donor. We do not manupulate them to grow in term of size, number or function. We just take them and transplant them. Islets are like a miniature organ. They contain 4 different types off cells that work together to control blood glucose.
In contrast, stem cells are immature cells that needs to get manupulated in the laboartory to become an insulin producing cell. During manupulation we need to turn on some genes to make the desired cells. I think we are still far from clinically widely use of stem cells.
Now back to your question, what basically LCT does is to cover the pig islets with a specific material (the procedure is called encapsulation) that protect the islets from the immune system attack. Their approach is good and well respected in the scientific community. It satisfies your extended treatment plan, but it's not enough to find the cure.
Overall, considering the costs and the chances of failure, I suggest closed system loop monitoring for your kid.
I have devoted my life time to understand diabetes. I will let you know if I find something promising.
Sean Farhy profile picture
Thank you so much!!!! Please do contact me if you hear anything that could be of help
Ugo20 profile picture
28 Jun. 2011
Wow This article was great. Thanks along for doing all that research and crunching the numbers. Greatly appreciated. And you are right about insulin Sean, it is the only way to treat Type 1.
Sean Farhy profile picture
Dear Sean,
I really enjoyed reading your article. I have been working on Diabetes over 10 years now. I am involved in Islet Transplantation since 2004 and I got trained in the best lab. in the world in Edmonton, Alberta (Edmonton Protocol). This is what I think:
a few people are working on the cure for diabetes. Islet Transplantation is a treatment not a cure. LCT is working on transplanting islets from pigs due to human islet shortage. Prochymal is a stem cell. any cell based therapy is considered treatment not a cure.
to cure the disease we need to first understand the disease. We are not clear yet about the cause(s) of diabetes. In my opinion, the problem with diabetes is not in the pancreas. It's in the immune system. By replacing pancreas we do not solve anything. It's like symptom therapy.
M. Reza Mirbolooki
Sean Farhy profile picture
Thank you so much for your comment!! There is so much I would love to ask you, about the LC Technologies and just the advancement of the industry in the treatment and cure arena, in general. I am pretty sure that LCT does not use immune suppressing drugs, if it does not use these drugs then:

What is/ are the downside of Prochymal?
Does the Immune system attack the "pig stem cell" as it would a human cell?
How long does it work before one would need a future injection?

And just any other points that you could add to the "layman"- I do my best to try to understand everything that I read on LCT's website, and other industry websites- but there is so much that I am sure I miss things

About stem cells being a treatment instead of a cure--I am more than okay with an extended treatment …if that means no injections, and checking BGL 12 times a day etc... If you can add anything at all, even the most minuscule of things it would be so appreciated.
Sean Farhy profile picture
Jim, insulin is THE ONLY way to treat Type 1.
@Sean Farhy what about the transplants that were in clinical trials years ago. They reported the patients were able to drink milkshakes without any difficulty. Then suddenly the reports of this trial stopped being published. What happened? Did they find a cure and were silenced because too much money was lost?
Insulin is NOT the onlynwayntomtreat type 1 diabetes. The onlynothervapproved drug for type 1 is Symlin. By slowing gastric emptying, Symlin reduces or eliminates the need for fast acting insulins and results in weight loss instead of weight gain.
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