Why Kaiser Permanente, Goldman Sachs, and other industry players don’t like regenerative medicine

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I just got done reading the ‘Elite Hospitals Plunge Into Unproven Stem Cell Treatments‘ article from the Kaiser Family Foundation ( yes – related to Kaiser Permanente ), and frankly, i found it hilarious.

Clearly, this is a hit piece designed to paint the use of stem cells as wreckless experimentation, even throwing well respected research hospitals like Mayo Clinic under the bus and cherry picking their website in a desperate attempt to find an article that indicates the Mayo Clinic may be uncertain about stem cell / PRP therapies.

And of course, they find the worst examples of stem cell treatment by unlicensed doctors going awry, like the case where a ‘doctor’ shot stem cells into an eyeball in an attempt to cure partial blindness, resulting in complete blindness. Obviously, stem cells can do no good.

Last year around this time, Goldman Sachs published a report titled ‘The Genomic Revolution’ that was bearish about regenerative medicine, making an argument that curing patients is a bad business model:

The potential to deliver “one shot cures” is one of the most attractive aspects of gene therapy, genetically engineered cell therapy, and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies… While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.


– Analyst Salveen Richte

So what’s really going on?

I expect that there will be many similar articles in the future, as companies reliant on perpetual streams of income from perpetual treatment dependent customers stare down the barrel of these “one shot cures” which are a direct threat to their business models.

This happens to be the case in orthopedics, as stem-cell and growth factor based therapies that regenerate cartilage such as invossa, tpx-100, sprifermin, etc threaten the market for metal and polymer joint replacements, which have limited lifespans and are often fraught with complications. There are even orthopedic doctors writing misleading articles about stem cells; whether this is out of sheer ignorance or malice is anyone’s guess.

Therapies using stem cells, genetically modified cells, specialized growth factors, Nanotechnology, 3d printing, et cetera are eventually going to hit this industry like a wrecking ball. Health insurance companies may go extinct. Traditional pharmaceutical companies will be faced with record low consumer preference for allopathic remedies ( aka medicine 2.0 ) and be forced to consolidate, die, or adapt and embrace the revolution. Investors who still believe in medicine 2.0 will either shift their holdings, or lose their shirts.

Goldman Sachs doesn’t get it.

Goldman Sachs is correct that one shot cures are not a good business model, but they are are not seeing all the dimensions. The business model of medicine will change as medicine changes, not the other way around. Here’s how we see that playing out:

  1. At the best, traditional allopathic treatment outcomes are still inferior to treating the condition’s root cause. The patient has to take pills, get injections, and/or receive expensive medical treatments for the rest of their lives to keep the disease at bay. Even if regenerative medicine for the condition is more expensive, the patient may chose it simply because it is far more convenient. If it is less expensive, then it’s a no-brainer.
  2. Outside of the United States, most of the world’s medical systems are socialized, and there is downwards pressure on costs in these systems. Initially, we expect regenerative medicine to be expensive, but it is very likely it will be the lowest cost option available, and this will be preferred in socialized health care systems. Governments around the world – even the USA’s – have poured trillions of public dollars into regenerative medicine research. There’s a reason for that.
  3. Stem cell based therapies will initially be expensive, but multiple research hospitals have been working on ways to produce the therapeutic cells cheaper, faster, and better. Governments may eventually invest into this as well. We will see occasional industry-wide drops in the price of these therapies, as the technology improves; in a similar manner to how the personal computer revolution developed.
  4. Any investor would hate to be invested in a traditional pharmaceutical company on the day that a best selling product is instantly rendered obsolete by a regenerative therapy passing phase 3 trials and making it to the market. Even if the regenerative therapy is not as lucrative, would you rather be holding old pharma co or new regnerative co’s stock?

What is KFF thinking?

A company like Kaiser Permanente will have to reimburse, recommend, or directly use the products of big pharmaceutical companies. Most of these companies are working on developing regenerative stem cell based medicines – even Novo Nordisk, whose bread and butter is a steady stream of insulin sales, is investing in stem cell therapies!

Unless they are committed to becoming the dodo bird of the health care industry, KP is going to have to become one of the reckless stem cell therapy dispensing outfits; probably in a matter of 2-3 years. Will they still decry stem cells then?

Predictions for the future

There will be plenty of doubters and naysayers, and some industry groups may even wield the weapon of government to put obstacles in the way of regenerative medicine, but history has shown it is impossible to hold back important advances in technology for very long, and those who resist instead of adapt usually end up going the way of Eastman Kodak.

Along the way, we will hear an increasing amount of death rattles in the form of misleading information from ‘foundations’ connected to large industry interests, as medicine 2.0 goes into a very slow decline.

I think one day we will look at these articles and see them like Paul Krugman’s prediction about the internet. We hope you enjoy the laughs as much as we do.

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