You raise an interesting point, Sairah. My assumption is that the indications for which these drug discovery companies will all be key areas for biopharma and biotech – cancer, cardiology, MS, ALS, Alzheimer’s etc – because these are the illnesses for which ‘blockbuster’ molecules have the highest probability of being created (market size, demand, lack of alternatives etc.). Therefore, the incentives are aligned. The only question is when will a drug get launched in the market, whose origins were in silico and not in vivo.
That’s the million dollar question, Ting. BSSE theories suggest that ideally these startups should someday be able to produce drugs themselves. Having said that, I personally believe that they will either give drug discovery services to big pharma / biotech or be bought by them. Either way, I hope the technology develops and better and cheaper drugs are produced!
You’re right, Carl, but it is still early days. The 24 drug candidates that BenevolentAI has apparently developed will first need to be clinically tested and after the trials are done their efficacy will need to be checked. The jury is still out on whether it has established good economics. However, it has certainly created value and seems to be beginning to capture some of that through its partnerships with big pharma and the $800M deal etc. Time will tell as to whether it (and its peers) can capture more of the value that will hopefully be created in the field of drug discovery.
Interesting point! So DeepMind will hopefully go on to do big things and really impact healthcare. If it does, it will be better for all of us. But if and when that happens, companies like BenevolentAI can still succeed side by side. There are many applications of AI / ML to healthcare and drug discovery is just one of them. I don’t think DeepMind has focused on drug discovery just yet but I hope it does because ultimately it will help the entire ecosystem, and eventually us consumers (patients). I would be very happy if Big Tech was able to disrupt healthcare and make it cheaper and better! But for now, BenevolentAI is focusing on a specific part of healthcare and has made great strides, whereas DeepMind is still searching for specific problems to solve.
BTW, DeepMind was acquired for around 500-600M in 2016 and Benevolent AI is around $2B by now – so perhaps the latter is not so small and nimble compared to it 😉
Hi Rachel, thank you for bringing this up. Once the drugs are “discovered” by companies like BenevolentAI, they still need to be tested in clinical trials, after which the FDA will review them. So, the overall process will be shortened (and therefore, cheaper) but the FDA’s role will still remain the same.
So IBM Watson is brought up all the time as a comparison. While no one really knows whether it actually has better AI capabilities for drug discovery than Benevolent or others, what we do know is that IBM Watson’s main use cases have been big data analytics and image recognition in healthcare so far. Nothing about drug discovery just yet. I would imagine it could be trained to do the same work as Benevolent than others but perhaps the folks at IBM have other uses in mind.
I think the answer lies in traditional scientists joining hands with computer scientists and doing the drug discovery work together. If each operates alone, faster drug discovery will not happen. Btw, this (joining hands) is indeed starting to happen at many large pharma companies now! Why else would big pharma be investing in these startups? 🙂
Thanks for your comment, Kat. BenevolentAI’s only source of competitive advantage as of now according to me is that they moved in early and they already have 24 drug candidates for testing, apart from partnerships with other pharma companies. Other companies like Insilico Medicine and Recursion also have drug candidates and pharma partnerships but BenevolentAI is the only unicorn with actual products (that are being tested). Who knows though, its peers may beat it eventually. But even if that happens, as consumers, we’d all still benefit!
Thank you for this interesting post! I own a Fitbit and like Carl above, stopped using it after a few months. My reasons were different from his though. Fitbit stopped feeling interesting to me – sure I could track my heartbeat, pulse, steps etc. but there was no “what next” from all that tracking. So what if I did 15,000 steps in a day? How had it impacted my chances of getting cardiovascular disease? So what if I completed my goals for a full week consistently? Did it materially change some relevant measurable medical parameter for me? I feel that Fitbit did not create an ecosystem around it, which made it lose its shine for many of its initial users, who could capture the same value from cheaper devices of Xiaomi or more fashionable ones of Jawbone. If Fitbit could have partnered with digital health companies, innovative payors who incentivize # of steps taken per day etc., then we’d perhaps be seeing a more successful Fitbit today because Fitbit would then actually be in a position of giving people insights, not just data.
Thank you for raising this interesting topic. I am a big movie buff and love going to the theater. However, as an international student, I have found most theaters in Boston to be sub-par, compared to the movie watching experience in many developing countries. As an example, a ticket to a good movie in Regal Fenway in Boston costs around $15-20, whereas the same movie in a similarly located and quality theater in Mexico City or New Delhi will cost ~$3-4. Even if you adjust for purchasing power parity, it still costs way more to watch the same movie with a similar experience in Boston. That’s where the battle has been lost by chains such as AMC. I fully agree that netflix and amazon video is perhaps the biggest source of threat; however, I would like to believe that movie lovers will still enjoy going to theaters, even if not as frequently as before, because the experience of watching a movie on the large screen is different. But currently that experience is average / bad in a theater such as AMC Loews – the theater seems way more run-down than any comparable theater in an urban area of India! AMC and other theater chains should first focus on improving the movie watching experience – back to basics – and then think of combating the threat of Netlfix and AR/VR.
Interesting post, thank you! I would agree with you that Roboadvisors are winners. They are clearly both creating and capturing value for ordinary retail investors, a space which has been long dominated by fund managers who charge a sizeable percentage of AUM. While I agree with some of our classmates above that the unit economics for robo advisors are currently in question because of high CACs, I believe that this is only because this concept hasn’t caught the awareness of retail investors at large yet. And I feel that is so because passive investing has only started to become more popular than active investing amongst retail investors in the last few years. After all, passive investing is the foundation on which robo advisors’ algorithms work. I would imagine that the day is not far when the bulk of the market moves towards robo advisors for retail investors (maybe institutional too some day but that day is much farther). After all, which retail investor would want to receive 6% through an active fund manager (actually only 4% after the fund manager’s fees have been deducted) but stand to gain 6% or more through robo investing? Once it becomes well known that passive investing through ETFs and index tracking funds are over the long term yielding similar or better results than active fund managers, robo investing will be the hottest form of retail investing.
Thank you for your post! I found this story very interesting and hadn’t actually heard about it, unlike most of our classmates. What strikes me as the most surprising is the initial price tag of $700 and lack of product testing with consumers, which ultimately resulted in this fiasco. I would imagine that founders thought they are catering to a certain segment of society who were ok paying that much money for something that perhaps wasn’t as valuable, when they first put the price tag. Their way of capturing “value” I guess. But, did they realize that they weren’t creating that much value in the first place? I would imagine the juice from a NutriBullet to be equally nutritious as their juicer. Did they bother to do a comparison? A big takeaway from this is how every entrepreneur should clearly articulate additional (consumer) value created from his or her own product vs competitors’. A second takeaway is a reinforcement from what we learned in TEM – do consumer testing iteratively until you have found your product-market fit.