The Lewin Group’s 2004 report estimates that Medicare spending for AD will be $189 billion by 2015. Currently, about $5 billion annually is being spent worldwide on drugs to treat AD. These therapies, however, do not cure AD, they simply alleviate the symptoms. The current economic burden for AD patient care in the U.S. is about $100 billion.
There is a lot of new information on risk factors and how interventions in life style, such as diet, exercise, and intellectual stimulation, can slow down the disease process, however, scientists do not fully understand the cause of AD. Recently there has been a step-up in R&D, and there is a growing clinical pipeline of new drugs. Diagnostic tests, particularly biomarkers, are at an early stage but are urgently needed to show the effectiveness of drugs in development.
The market potential for Alzheimer’s disease and related cognitive disorder therapies is huge due to the numbers of patients affected and the cost of care. The R&D investment and knowledge base is growing each year with positive data for several new therapies expected in 2009. Products currently on the market are sold by larger companies such as Pfizer and Novartis as well as generic firms, so their stock prices are not very sensitive to sales growth.
Many top-tier drug companies also have products in clinical development for AD. Investing in small- to mid-cap biotech companies offer the best growth potential in spite of the clinical trial risk involved. As always, an investment portfolio comprising a range of companies is the best approach with an overweighting on specific firms as they put out positive clinical data in the later stage. Another indicator of lower risk would be the establishment of an ETF (exchange-traded funds) for companies in this sector, such as the HHN Neuroscience ETF created by Xshares.
Emerging companies that have encouraging Phase II data are mentioned in this article. The first next-generation product expected to come to market hopefully by the 2010–11 time frame will have multibillion dollar revenue potential.
Current and Predicted Market
Glutamate is a key neurotransmitter affecting memory and learning and is a target for drug discovery. It is implicated not only in AD but also in other neurodegenerative diseases such as schizophrenia and depression. Memantine is currently approved for AD and appears to block the glutamate pathway (NMDA receptor modulator) but also boosts the acetycholine (AChEI’s) pathway.