Drug Discovery is expensive. Even drugs for an important disease like cancer have not been as easy to discover. There are many reasons and that could be a topic for a separate article but an MIT professor, Andrew Lo has proposed a new model.
In the present model, all drug discoveries are funded primarily by private companies but in the new model proposed by Mr. Lo, a superfund needs to be created to fund cancer research and that fund can be funded by the bond market. The thinking is that if you require $30B to create a fund then you need a market that is big – like the trillion dollar bond market. The super fund will get a decent rate of return since a few of the entities will get developed into block buster drugs.
Interesting proposal – may need more clarity but the idea is certainly good and could be a way financial engineering could help with drug discovery in the future. See the link below for the financial times interview and also see this video here to decide whether financial engineering can cure cancer!
