Drugs vs Mobile: Two Ways To Create $1B in Value

Article Highlights

  • Here are two radically different approaches to creating $1B in value:

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  • Don’t debate the merits of a delightful technology or a reliable drug, but imagine the potential of their intersection.

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  • For the intersection of mobile and health the great challenge will be figuring out how to turn this heat into light.

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This week presents an interesting contrast - two radically different approaches to creating $1B in value.

On Monday, the acquisition of mobile app Instagram by Facebook was announced, shocking some while awing others.  Jon Stewart probably captured the zeitgeist best: "A billion dollars... of money?"  For a smart summary of the deal, see this New York Magazine story (h/t Ruth Coxeter).

Today, URL Pharma was acquired by Takeda for nearly the same amount - $800M.  The story here in brief is that for hundreds of years, colchicine was used for the treatment of gout and other conditions; it was an effective drug but had to be used carefully.  In 2006, the FDA launched the "Unapproved Drug Initiative" offering a period of exclusivity for companies willing to take existing drugs that had never been rigorously validated through an extensive clinical study and FDA approval process. 

URL invested in the formulation development and clinical studies required for colchicine, and ultimately received FDA approval, and associated exclusivity, in 2009.  As a result - patients finally had a "trustworthy" (i.e. FDA-validated) version of colchicine to take, but at a steep price - about 50x what it used to cost.  This has resulted in significant revenue for URL, ultimately leading to today's take-out.

URL and Instagram present two very different approaches to innovation and value; Instagram has created value by coming up with something either imaginative/cool/delightful or utterly trivial, depending on your point of view, while URL has created value by delivering either a reliable important medicine or by focusing on process and working the system, again depending on your point of view.

My own take: rather than debate the relative merits of a delightful technology or a reliable drug, imagine the exceptional potential to be found at the intersection of these worlds.  Right now, there's a lot of energy at the intersection of mobile and health; the great challenge, and opportunity, will be figuring out how to turn this heat into light.

 

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David
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