Posts Tagged ‘pancreas’

rising obesity levels are seen as an investment opportunity, which could mean resistance to finding a cure for diabetes.

August 31, 2012

Fullermoney is like a tip sheet for moneymen and relies on objective assessments of situations, the last bit is why I read its newsletters.

This bit is useful as a summary of what diabetes is but is meant to point out the fact that diabetes provides an investment opportunity.

Thinking further ahead it poses the problem of how these drug companies and these investor’s would re-act to a cure for diabetes, for the masses.

This could be especially problematic for the masses, as I recently read that stem cells could be used to create a new pancreas, or its equivalent. I suspect that only the rich would be able to afford that sort of cure.

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Commentary by Eoin Treacy

Pharmaceuticals for Beginners 2012 � Thanks to a subscriber for this highly educative 329-page report for anyone with an interest in the pharmaceuticals sector. The full report is posted in the Subscriber’s Area but here is a section on diabetes:

Diabetes is not yet curable, but can be controlled. The goals of diabetes management are to attain and maintain a near-normal blood sugar level, and reduce the risk of complications.

In Type 1 diabetes, treatment depends on the individual’s needs, but typically consists of an insulin regimen, which at present requires the regular injection of differing formulations of insulin. This often comprises daily injections of long-lasting insulin to provide a basal level similar to that of the normal body, together with separate injections of rapid/intermediate acting product to provide a �top-up’ at meal times.

For Type 2 diabetics, treatment initially focuses on diet and exercise, as the loss of weight in obese patients helps to reduce the degree of insulin resistance. If this is insufficient, a range of oral medication may be started. Medication usually works by addressing one or several of the issues of Type 2 diabetes, e.g., reducing peripheral insulin resistance, reducing glucose production by the liver or increasing insulin secretion.

It should also be noted that diabetes is a progressive disease, where insulin resistance and ongoing beta cell death result in the patient progressing from a single oral therapy, to multiple oral therapies, to finally requiring insulin. At the time of diagnosis, only about 50% of pancreatic beta-cell function would remain, and this is estimated to continue to decline at an average of 4% a year. About 50% of patients will require more than one anti-diabetic medication by three years after their initial diagnosis, and this increases to 75% at nine years.

My view � I reviewed a number of US pharmaceutical companies in yesterday’s piece on shares which appear to be emerging from a 12-year process of valuation contraction. Due to the relatively predictable nature of pharmaceutical cash flows, they tend to have some of the more consistent patterns in terms of the progression of P/E multiples. Their valuations are therefore easier to monitor with charts.

The healthcare, energy and technology sectors are in a special category because ground breaking innovation in any one of them can literally create value where it had not previously been imagined. In the case of healthcare, new therapies can enhance standards of living, increase productivity and cut costs. Therefore, while many look at the healthcare sector as defensive, it unquestionably also has a growth aspect. Additionally, the expansion of the global disposable income class is creating additional demand growth for healthcare products which is likely to remain on a secular upward trajectory for a considerable period of time.

Diabetes is a global pandemic fuelled by increased calorie consumption and can be viewed from an investment perspective as a corollary of rising per capita incomes.