2 Lucrative Drug Markets You Should Avoid

To make a successful drug, it helps to have:

  • A large number of people with the disease.
  • A limited number of successful treatments.

You really don't need both. There are enough people with rheumatoid arthritis or high cholesterol, for example, to have multiple blockbuster drugs that treat the diseases. On the other hand, orphan indications that have just a handful of patients can still produce blockbusters through high prices and lack of competition.

If you can find a market that has both, I recommend running away.

Not what you were expecting? Let me explain.

In theory, having both is obviously the ideal situation. In reality, the situation is inherently risky because there's almost certainly a reason that a large number of people are going untreated.

Forget this super-high-reward, super-high-risk disease
Alzheimer's disease is a perfect example. Given the large number people with Alzheimer's, which will only increase as baby boomers get older, the potential market is huge.

Yet no one has been able to create an effective medication. It's not as if they haven't tried. The trash heap of Alzherimer's disease drugs is pretty high.

Those that have gotten through aren't all that effective at slowing down the disease progression, let alone stopping it.

The main problem seems to be a lack of understanding as to what causes the dementia seen in Alzheimer's patients. The brains of patients contain amyloid plaques, but it isn't clear if they're the cause of the disease or if they're just a byproduct.

Pfizer (NYSE: PFE  ) , Johnson & Johnson (NYSE: JNJ  ) and Elan's bapineuzumab was designed to bind directly to the amyloid plaque, but it didn't work, failing multiple phase 3 trials last year.

That hasn't stopped others from trying to attack amyloid from different directions. Eli Lilly's (NYSE: LLY  ) solanezumab binds to the individual amyloid before they form plaques, while bapineuzumab was designed to bind to the plaques directly. And Merck is developing MK-8931, which inhibits an enzyme that creates the amyloid protein fragment that forms the plaques.

While I certainly hope they work -- Alzheimer's runs in my family -- I can't recommend investing in the companies for their Alzheimer's programs. History isn't on their side.

A third of Americans
The obesity market is so large that more than a third of Americans are eligible to take Arena Pharmaceuticals' (NASDAQ: ARNA  ) Belviq and VIVUS' (NASDAQ: VVUS  ) Qsymia. Yet few are. Sales of both drugs have been pitiful, registering just a few million each quarter in their early launches

The companies have a couple of challenges to convert potential patients into actual patients.

First, they've got to persuade insurers to pay for the drug. Both drugs are too expensive to expect patients to pay out of pocket. Arena and VIVUS are making progress, but most Americans still don't have prescription coverage for the drugs.

Second they have to convince doctors to prescribe the drug. With exercise and diet being relatively safe -- sore muscles and shin splints aside -- doctors are leery of prescribing obesity drugs, especially after many doctors jumped on the fen-phen bandwagon.

Both issues can be overcome, but it's going to take time and I expect sales will remain lackluster for the immediate future.

Watch and wait for now
It's easy to get excited by these large markets with unmet needs, but investors would be better off watching from the sidelines for now. Wait for the Alzheimer's and obesity markets to work through their respective issues and then invest. You'll likely miss some upside compared to jumping in now, but avoiding the downside makes it worth it.

While you're waiting, consider looking at dividend-paying stocks to add to your portfolio. The Motley Fool's special report "Secure Your Future With 9 Rock-Solid Dividend Stocks" is a great way to kick-start your search. Just click here to get your free copy today.


Read/Post Comments (32) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 31, 2013, at 3:08 PM, marp11 wrote:

    so BRIAN did your masters get annoyed with your article hours ago praising ARNA?????

    Did they get scared with the fantastic scrip #'s??

    Are they short millions of shares??

    Cant cover???

    You are a joke.

  • Report this Comment On August 31, 2013, at 3:09 PM, RSRdriver wrote:

    "Lackluster"? Arena cannot even give Belviq away for free!

    There is no way doctors or ins. co's will ever get behind this useless excuse for a drug.

  • Report this Comment On August 31, 2013, at 3:09 PM, marp11 wrote:

    is Belviqs 18% increase in sales last week making your masters nervous??

    should be,,,,its a blockbuster in the making.

    I would be scared too if I was short ARNA..

  • Report this Comment On August 31, 2013, at 3:10 PM, marp11 wrote:

    First, they've got to persuade insurers to pay for the drug. Both drugs are too expensive to expect patients to pay out of pocket. Arena and VIVUS are making progress, but most Americans still don't have prescription coverage for the drugs.

    I GUESS THE AMA CLASSIFYING OBESITY AS A DISEASE WILL REALLY STOP INSURERS FROM COVERING BELVIQ.

    you are so stupid

    even vvus longs are laughing at you

  • Report this Comment On August 31, 2013, at 3:14 PM, marp11 wrote:

    obesity is definately not IMPORTANT

    ONLY A CONGRESSIONAL ACT COMING TO

    TARGET.

    RSDRIVER,,,,POOR SAD SHORT

  • Report this Comment On August 31, 2013, at 3:15 PM, RSRdriver wrote:

    The FDA also said Belviq is "marginal" at the ADCOM!

    Politics is what got it through and every short knows this. Now it has to perform and the "marginal" comment is proving to be more than true.

    Face it, you were conned by the hype and pump and dump people not common sense!

  • Report this Comment On August 31, 2013, at 3:15 PM, marp11 wrote:

    Arena Pharma Pushes Forward

    By Brian Orelli

    August 30, 2013

    guess your MASTERS ARE NOT PLEASED WITH YOU BRIAN

    MAKE UP YOUR MIND JERK

  • Report this Comment On August 31, 2013, at 3:16 PM, marp11 wrote:

    Arena Pharma Pushes Forward

    By Brian Orelli

    GUESS YESTERDAYS ARTICLE WAS BEFORE

    THOSE GREAT SCRIP NUMBERS

    BWAHHH

  • Report this Comment On August 31, 2013, at 3:18 PM, RSRdriver wrote:

    Considering what the numbers have been, in Areniac Village I guess they were great!

  • Report this Comment On August 31, 2013, at 3:23 PM, marp11 wrote:

    ARNA 2 Lucrative Drug Markets You Should Avoid - at Motley Fool

    ARNA: Arena Pharma Pushes Forward - at Motley Fool

    GEEEZ BRIAN MAKE UP YOUR MIND

    BWAHHHHHHHHHHHHHHHHH

  • Report this Comment On August 31, 2013, at 4:23 PM, marp11 wrote:

    BRIAN LOVES ARNA IN THE MORNING

    SCRIP NUMBERS COME OUT VERY STRONG LATE MORNING

    BRIAN BASHES ARNA SOON AFTER

    BRIAN WORKS FOR HF

  • Report this Comment On August 31, 2013, at 4:30 PM, AreaRich wrote:

    Belviq, unlike Qsymia, is an entirely new drug compound. Eisai is doing the right thing by first educating the medical community before pushing hard with an advertising campaign. Also, obesity has just been classified as a disease so beforehand most doctors shied away from treating obesity unless the patient had a morbidity associated with the disease. It is obvious that congress on the recommendation of AMA has decided to reclassify obesity as a disease which will force insurers to cover treatments. You are doing investors a disservice by not advising them to enter at the beginning of an opportunity caused by changes in laws and attitudes. Obesity will now be treated by what it really is a disease who effects contribute to about 160 billion dollars a year in medical cost. Any drug that can help relieve that expensive burden is certain to be a success. Congratulations on recommending your readers ignore this opportunity.

    CC

  • Report this Comment On August 31, 2013, at 4:40 PM, RSRdriver wrote:

    Hey, Kandy! You are obviously looking for morons ready to be taken. You can't do better than the ones on the Yahoo ARNA message board!

    You can thank me later.

  • Report this Comment On August 31, 2013, at 4:55 PM, omskpicker wrote:

    This is regulations of just one board.

    Ask yourself if you are a physician will you prescribe this drugs?

    http://www.med.ohio.gov/pdf/NEWS/Prescribing%20Qsymia%20&amp...

  • Report this Comment On August 31, 2013, at 8:32 PM, CaptUSA wrote:

    Who is MARP11 and what bridge does he live under? He gives trolls a bad name.

  • Report this Comment On August 31, 2013, at 10:52 PM, sammievee wrote:

    Impossible for you to have any credibility when you try to claim that "Sales of both drugs have been pitiful, registering just a few million each quarter in their early launches". Each quarter usually suggests a drug would have been on the market for more than one quarter, NOT THE CASE WITH BELVIQ which has not even been on the market for three months!

  • Report this Comment On September 01, 2013, at 2:40 AM, 1yossi1 wrote:

    Dear Dr. Brian,

    ARNA's pps will double (up 100%) in 6 months' time despite such articles and the 64M short positions!

    Areniacs know that BELVIQ is a blockbuster for sure!

    Each one of us knows few patients who tried the drug already, and real Areniacs will never sell cheap!

    Shorts are toast (DTC will start in less than 100 days...)!

  • Report this Comment On September 01, 2013, at 2:07 PM, Foreeverlong wrote:

    Brian,

    Once again, another unrealistic "hit piece!". I am beginning to believe the rumors that you are a shill for the shorts and HF's.

    You said, "Both drugs are too expensive to expect patients to pay out of pocket. Arena and VIVUS are making progress, but most Americans still don't have prescription coverage for the drugs".

    I say: Are you kidding? 1st, if you don't have insurance, 1 month of Belviq ($200) is by far cheaper than Jenny Craig's plan ($350 to $450).

    You said: "Second, they have to convince doctors to prescribe the drug. With exercise and diet being relatively safe -- sore muscles and shin splints aside -- doctors are leery of prescribing obesity drugs, especially after many doctors jumped on the fen-phen bandwagon".

    I say: Once again Brian, it is highly probable that your conclusion is not fact-based. Did you do a survey? How do you know this to be correct? Tell us what the basis is for this conclusion. Or, did you just pull this out of some orifice? I know hundreds of physicians, and the comments that I have heard is that physicians are very open to looking at Belviq as the solution for overweight patients. Physicians know it is extremely difficult to get patients to diet and exercise, and they just keep seeing them for their co-morbidities. One physician that I know personally says, "Belviq is a fabulous drug that works well for my patients. In fact, I have never had a patient that did respond well to it, and there are almost no complications with Belviq". That's what I am hearing Brian.

    Brian, make an effort to be accurate, fair and fact-based in your articles or don't publish them! And, finally turn your baseball cap around! It doesn't look professional, but it is consistent with the quality of your articles.

  • Report this Comment On September 01, 2013, at 2:11 PM, Foreeverlong wrote:

    Correction: One physician that I know personally says, "Belviq is a fabulous drug that works well for my patients. In fact, I have never had a patient that didn't respond well to it, and there are almost no complications with Belviq".

  • Report this Comment On September 01, 2013, at 2:45 PM, RSRdriver wrote:

    If you have bothered to read the reactions to this well written and honest evaluation of ARNA and Belviq then, you now know why Cramer once described these Areniacs as "dumb as a bag of hammers".

    What I find most annoying though is , they seem to think that the rest of the investment world is as dumb as they are and expect everyone else to fall for the lies , numbers twisting, fake doctors( plenty of those!) etc.etc..

  • Report this Comment On September 01, 2013, at 3:15 PM, Foreeverlong wrote:

    RS,

    You are full of it! This is not a well-written article. It is the typical superficial blow-by article that Brian has put out before. Not that you are worth my time to debate. Brian is attempting to influence readers to summarily dismiss one of the strongest growth sectors and one of the most novel drugs to be developed for weight and Type II diabetes control in years.

  • Report this Comment On September 01, 2013, at 3:19 PM, RSRdriver wrote:

    Add the FDA to that dismissal too! They also said it was marginal.

    Your hype and pumping of this nothing drug knows no bounds.

  • Report this Comment On September 01, 2013, at 3:25 PM, Foreeverlong wrote:

    RS,

    Your not up to speed on the facts!. The placebo adjusted efficacy of Belviq was 8 to 11%, which is double the FDA requirement. Further, Belviq is described by the Dir. of the FDA as a "novel" drug. And, guess what RS? If readers will go to www.belviqsuccessstories.com they will see the living proof of what Belviq is doing. Those are the facts RS. Live with it and stop the FUD!

  • Report this Comment On September 01, 2013, at 3:41 PM, RSRdriver wrote:

    "belviq success stories is just another Areniac built page for fools!

    And go to the ADCOM and see what the FDA plainly said.

    Your bs might work on the uneducated and new investors that it attracts but don't think for a minute it will do any good (any more at least) where it counts!

    See you at sub$5 real soon.

  • Report this Comment On September 01, 2013, at 4:27 PM, Foreeverlong wrote:

    RS,

    I will put my money, and have, behind the science of Belviq and Eisai's commitment of over $1B as opposed to the imbecilic BS that you spew! Ask Mommy to give you some money so that can invest in Arena. You won't regret it!

  • Report this Comment On September 01, 2013, at 4:34 PM, RSRdriver wrote:

    Glad your "foreverlong" because it will take the laws of valuation and inflation for you to get a profit on that doublewide mortgage money you undoubtedly used.

  • Report this Comment On September 01, 2013, at 5:15 PM, RSRdriver wrote:

    Even more worthless calls coming up huh!

  • Report this Comment On September 02, 2013, at 11:47 AM, earthunit wrote:

    Man, I hate MF, The Street, and CNBC, among others. Way too much slanted articles and cronyism. If you take the advice of any of these you deserve to lose your money. Do your own homework! Read your own press releases, 10Qs, 10Ks, watch and listen to your own conference calls and earnings reports. All of these MF type sites should be made illegal as should ALL analysts upgrades, downgrades, estimates, and recommendations. Also, throw shorting into the illegal category; it has absolutely no value to capitalism.

  • Report this Comment On September 02, 2013, at 9:46 PM, TheGazoo wrote:

    RSRdriver = Nut bar

    Enough said.

  • Report this Comment On September 03, 2013, at 11:47 AM, Foreeverlong wrote:

    Gazoo,

    RS does not appear to have a lot going for him. But, we can't save them all!

  • Report this Comment On September 03, 2013, at 12:49 PM, RSRdriver wrote:

    Just the money I have been taking from you for the last year!

  • Report this Comment On September 04, 2013, at 11:14 PM, instabash wrote:

    Thank you brian for your thoughts Don't let these delusional areniacs get to you they are just upset because they never saw this downtrend coming

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2618344, ~/Articles/ArticleHandler.aspx, 9/14/2014 10:42:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement