The Debt Crisis and the Human Genome

My nomination for the most significant economic event of the past decade:  The failure of the Human Genome Project to  thus far deliver medically significant results.

Let me explain my thinking, and why there may be reason to be guardedly optimistic about the future.

Right now there are three depressing aspects to the current course of the U.S. economy.  First, the growth of healthcare spending, if it continues, will put a stranglehold on employers and taxpayers.  Second, the apparent inability of the private sector to generate well-paying jobs for college grads, if it continues, will put a squeeze on young workers.  Third,  the apparently inability of the U.S. to export enough to close a huge trade deficit,  if it continues, will leave the country exposed to a  dollar collapse and a sharp fall in living standards.

I could have arranged and described these differently, but that’s the outline of the negative picture.

The Human Genome Project had–and still has–the potential to be a powerful antidote to all three of these problems.  Let’s start with healthcare spending.  I’ll quote from today’s New York Times article (“A Decade Later, Gene Map Yields Few New Cures”):

..the primary goal of the $3 billion Human Genome Project — to ferret out the genetic roots of common diseases like cancer and Alzheimer’s and then generate treatments — remains largely elusive.

….At a [2000] news conference, Francis Collins, then the director of the genome agency at the National Institutes of Health, said that genetic diagnosis of diseases would be accomplished in 10 years and that treatments would start to roll out perhaps five years after that.

Cancer. Alzheimer’s. Diabetes. These are the expensive medical problems that eat up so much of our economy’s resources.  The possibility of a cure, say, for Alzheimer’s, could potentially turn the horrible economics of healthcare upside down. (see, for example, “Forecasting the Global Burden of Alzheimer’s Disease“).  Similarly, a cure or at least effective treatments for diabetes could sharply reduce healthcare outlays for diabetes, which are expected to triple over the next 25 years  from $113 billion to $336 billion (inflation-adjusted dollars).

What about jobs? Successful new innovations create new jobs–that’s what history tells us. If the Human Genome Project had led to a wave of new diagnostic test and treatments, the jobs would have followed.

Instead, what happened is that the pharma industry invested heavily in ‘genomics’ and got hit hard when it didn’t produce a flood of new diagnostics and treatments.  As a direct result, big pharma companies have been merging and laying off workers, not adding them. When’s the last time you heard someone talking about biology as a hot field for jobs?

This chart shows what happened over the past twenty years. In the 1990s,  job growth in pharma and biotech was able to keep up, more or less, with job growth in health services.  But over the past decade, just when you ‘d think that the mapping of the human genome would have created more jobs at pharma companies to take advantage of new discoveries, the opposite happened.  The drug pipeline dried up, and the big drug companies went into job-cutting mode.

This had an unfortunate domino effect. Cities around the U.S. had built their economic development strategies around attracting biotech jobs,  which looked like a great idea for getting ahead of a growth wave. But recent cuts have meant that the jobs gains have been relatively small.  Take St. Louis,  for example, which has been among the most successful areas in attracting  biotech research.  In 2006, for example, an article proclaimed “St. Louis And Its Companies Benefit From Biotech Push”:

St. Louis is coming of age as a biotech center…It has spent six years and added $500 million dollars in venture capital to build itself into a biotechnology hub. It has attracted new talent for companies already here, such as Monsanto Co. (MON), Pfizer Inc. (PFE) and Sigma-Aldrich Corp. (SIAL), and now is home to more than 15,000 employees at 400 more ventures, particularly in plant and life sciences.

Research, yes, for sure.   The number of jobs in the St. Louis area at “scientific research and development services” (including biotech) rose from  3500 in 2002 to 8300 in 2008.  That increase of +5K is  a fantastic performance, under the circumstances.

But research alone is not enough to make up for the loss of manufacturing jobs (down 28K over the same period).  You need production of real products, which require real production workers. Unfortunately,  employment in “pharmaceutical and medicine manufacturing”  in the St. Louis metro area appears to have peaked in 2006 (based on data through 2008). In November 2009 Pfizer announced that it was cutting 600 out of 1000 employees in its St. Louis research facility.

In fact, the “Biotech Strategy” used in St. Louis and elsewhere would have produced much bigger job gains if the research had been more successfully commercialized over the period.

Now let’s turn to trade. China, India, and the rest of the developing countries sell the U.S. an increasingly diverse array of goods and services. What does the U.S. provide in return? There’s the usual list of suspects, such as commercial aircraft (which is increasingly drawing on parts made outside of the country).  But they are not enough to avoid a huge trade deficit, even now.

The logical candidate for the next wave of U.S. exports should have been biotech products and knowledge. The U.S. is the acknowledged world leader; the research is expensive and lengthy; the production processes are complicated, delicate, require skilled technicians,  and cannot be easily offshored. And the category–treatments to deal with major medical problems–is something that everyone wants.

But what happened? Without compelling new biotech products, the big pharma companies were “me-tooed” to death. In fact, pharma trade went from roughly balanced to a big deficit.

This chart is simply astonishing.  Life sciences–the area where the U.S. is the clearly the world leader, where we have outspent everyone on research by a wide margin–has turned into a trade deficit.

Okay, it must feel like I’ve punished you all with negativism. I promised up top that I would be guardedly optimistic.  Here’s how I see it: The U.S, and more broadly the “advanced” countries, did what they were supposed to. They invested heavily in the cutting-edge new technology, biotech, which promised to make the biggest difference in the most important areas–health, food, energy.  The research has gone great, tremendous progress has been made. Commercialization thus far has sporadic–but the gap between research and commercialization is one which has been repeatedly bridged in the past. So I’d say that the odds are good that the Human Genome Project will have a significant economic impact over the next 5-10 years.

The big danger–that there are structural impediments in the U.S. innovation system which are slowing down commercialization. These include a lack of communication between academic scientists and pharma companies; excessive regulation by the FDA; a misguided patent system; and excessively short term thinking at pharma companies.  (You can add your own possibilities to the list).

I’m thinking about putting together a conference called “Fixing Pharma,” with the goal of identifying structural impediments to successful application of genomic knowledge. That’s just so important economically.  Anybody who wants to know more, drop me a note at


  1. No to represent myself as the expert in genomics, but aside from the fact that nobody understands much about how genes and mechanisms outside DNA interact, it seems fairly clear that this whole genome decoding thing (and predicting susceptibility to diseases with any degree of certainty) was a lot of hot air, and reminiscent of making a quick buck off of scares. To broaden the scope of my rant somewhat, there has been a lot of credulity towards “simple explanations” and general hype lately, approximately coinciding with the prominence of internet based information dissemination. I consider much of that as part of the “attention economy” which is all about the buzzword of the day, self promotion/marketing, and first-to-file sensationalism, at the expense of well reasoned investigations of the subject matter. Compare also (aptly named and literally) “twitter”.

    • Claims about medicine are uniquely subject to hype, because it is all about life and death. And when it comes to pharma, America has a long history of infatuation with magic elixers (think of the expression ‘snake oil’).

  2. Of course, as an engineer I’m predisposed to look for complex relationships in any subject matter. But most of the time that’s warranted.

  3. And Mike, no offense please, but it seems as somebody with a finance background you expect everything to proceed at the same exponential pace as the blowing of financial bubbles (including the resulting bailouts because the underlying “growth” that is being speculated on refuses to be likewise exponential). Well, maybe it is exponential in the long term, but with a smaller exponent, which still makes for an exponential gap.

    Actually, the base of the exponentiation includes disposable income, which is currently somewhat lacking. All those tech advances (that are realistic) may be there, but they cannot be monetized (financed?)!

    • Mike Mandel says:

      No offense taken. However, if you look back 10 years ago, you’ll see that reputable scientists were quite optimistic at the pace of change. And big pharma companies were willing to commit enormous sums to genomics. So ex ante a lot of knowledgeable people had ten year time frames.

  4. CompEng says:

    Mike, you say “The research has gone great, tremendous progress has been made.”

    I guess I haven’t seen the evidence of that in news or papers: all I’ve read are drips and drabs of maybe someday, nothing to indicate that sophisticated use of genetics is any closer than nuclear fusion.

  5. I think that your graph on the pharma deficit may be way off. Are your figures for pharma manufacturing? Because, yes, a lot of active ingredient manufacture has moved overseas; American active ingredient pharma manufacture has become more concentrated in complex synthesis and biologics, which are high value. However, the pharma manufacturing balance does not include transfer payments for patent licensing (which are a service and part of the services balance). To make things worse, a number of pharma companies move their US developed patents overseas to Ireland and other tax havens in order to reduce their tax burden. Because the split between payments for manufacturing and patents for a multinational like Merck is completely arbitrary (and inclined to understate the contribution of US manufacture for tax purposes), I do not know the extent to which Census figures are muddled in the process.
    Your overall point that whole genome was supposed to usher in massive amounts of US-based drug discovery which has not materialized is accurate; I just don’t trust your trade figures.

    • Mike Mandel says:

      Two things

      1) These are official figures
      2) I’m utterly convinced, like you are, that the official trade figures are terribly muddled, and I’m writing a piece for the Atlantic Monthly on that.

      • Patrick says:

        I would just be careful about using pharma manufacturing as a proxy for pharma productivity & economic activity. Just because we have a huge reported trade deficit in pharma with Ireland doesn’t mean Ireland is leaping ahead of us in pharma development. Just look at the rise and fall of Puerto Rican pharma. Tax gap closes & they leave. Additionally, in biologics that cost $10k or more per month retail, the opportunities for skeezy transfer pricing explode.

        Clearly drugs have not been the panacea for health care costs that Bill Clinton era pharma PR tried to make them out to be. There was extreme “intellectual capture” at that point, and if the money for the Genome project had gone into hospital process standardization and quality/productivity improvement, we would be in much different shape these days. Sometimes the basics are a better investment than the next shiny new thing.

      • Mike Mandel says:

        You are right that I need to be careful…but I base my conclusions on the combination of the trade data and the poor stock price performance of the big pharma companies.

        Skeezy transfer pricing is always a problem.

      • Patrick says:

        The other item to bear in mind is that the medical devices industry has been growing at an 8% CAGR for the last 10 years or more and is now a $200-250B global business, with most of the high margin products being built in the US. As examples of midwestern companies made good, there’s Cardinal Health, Medtronic, St. Jude Medical, etc.

        You can probably see this as a type of regulatory arbitrage. Starting in the 1990’s, the phase 1/2/3 process for drugs slowed to a complete crawl. Meanwhile, in the device market, use of comparable device designation allowed a each little step to go without separate approval, and there is no separate testing done by diagnosis. This has correlated well with increases in surgical spending, as surgery, again, is not given nearly the gauntlet that drugs are given.

        It’s like a balloon: push on one side and the air shifts to the other side: from pharma to devices/diagnostics. But costs increase perpetually.

  6. I think the complexity of the problem was underrated. It isn’t just genes but their control, expression, interaction, and side effects. As far as the trade balance, tax arbitrage has reached the point where assuming anything will have beneficial effect, other than tax policy anyway, is misguided.

  7. One could suspect that Big Pharma might not want cures that remove disease maintenance flows from the bottom line, and that bio-science resembles competition for their business model rather than opportunity.

    One might argue that removing the social burden of debilitating disease would net more people into the workforce than the economic structure can absorb. If such a patient would command 20 man-years of care, then the alternative of retrieving those 20 man-years will require 20 man-years of replacement jobs, plus another 20 for that person to sustain himself during the productive time won back for him/her. Some portion will come from playing out the same scenario broadly, but what then?

    Granted, it’s fatalistic thinking, but it is clear to me that the on-going focus on productivity serves to reduce the total labor demand by the economy to somewhat less than full employment. The housing boom gave us full employment, but it was apparently an artificial economy that exceeded the capacity of the fully employed workforce to finance — there was nothing to sustain it and little follow on work spawned by it.

    The genomic potential seems similar — a costly burst of activity followed by another increase in the number of people available to do work that nobody can justify. It’s almost like automating the caregivers out of their jobs, yet irrationally expecting them to generate greater demand. A different economic structure would benefit from the injection of more healthy people, but not the one we have.

  8. Wow, this is about the dumbest conclusion from the human genome project yet. It is the height of cluelessness to have assumed we would have cured anything between the data release and now. Do you have any grasp of how long a clinical trial takes?

    That said, let me add a tidbit that appears to have been missed: one of the biggest growth areas in biotech in the early part of this century was in stem cell research. Guess who was prevented from doing that? I was in a meeting at the NIH for a project that really needed stem cells, but we were blocked from doing that. Further, every time I went to a meeting in Europe it was clear we were getting our ass kicked on that.

    Way to impede progress, Republicans.

    • Mike Mandel says:

      Minimum time through Phase III is about 10 years, so we are at the minimum right now. And I’d be perfectly happy to hear that there are treatments in early stage trials that look like big winners. Frankly, that would be the best news possible. Do you know of any?

      • Well, let’s do the math: release of the draft was in 2000, right? And it was very drafty, by the way. And that was the starting point. After that–you need to pinpoint the relationship–which takes some time. Then you search the compound library. Then you maybe get lucky with existing compounds. That’s the best case scenario. Maybe compounds are not the right solution–maybe it’s stem cell therapy that would work better for some of the conditions. But there were major barriers there.

        Here’s a list of new clinical tests in the last 30 days in GeneTests: Each of these represents a research path that probably includes therapeutic interventions. But they don’t make the press like Alzheimer’s does. It doesn’t mean there hasn’t been progress on these paths.

      • Mike Mandel says:

        Honest question. Given what you knew in 2000, are you satisfied with the amount of progress that’s been made in diagnostics and therapeutics?

      • Sure, I’m satisfied. I know that gene sequences do not look like this:


        I understand the process of gene discovery. It’s not easy to link gene–>disease, then to confirm it, then to get it published. And then to develop a reliable test. It wasn’t going to happen in 2001.

        And I also know that drug discovery (which is a very separate component) is hard. And that pharmas don’t do much gene discovery, they have to rely on academia and biotech to get the ball down the field first. Then you start screening compounds.

        But my problem with this premise of yours is that even if there were a few things looking promising in clinical trials, that’s barely enough to keep a young biotech afloat, never mind save the economy. That’s just ridiculous still.

      • Mike Mandel says:

        I’d be happy to debate the first part of the argument all day long. I’m sure you can find people who were skeptical in 2000, and I can find people who were optimistic (notably the venture capitalists and scientists that started companies with real money, and the pharmas that invested in them). These two articles contain both sides of the argument.

        However, I disagree strenuously with your last paragraph. Give me one breakthrough success story–just one–and you will see economic gloom turn into optimism.

      • Here are some–just from one company that arose from the genomics boom. I used to work for them, I know what was in their databases–it was just DNA. They didn’t exist before the genomics era.

        How about Rosetta? New strategies, new types of drugs, all now possible.


        Gosh, this has been quite the walk through memory lane.

        None of this Genentech pipeline was informed by the genome data?

        The macular degeneration story has really taken off with multiple new leads. Charcot-Marie-Tooth, same thing. Some of these are not so sexy because lifestyle changes and prevention can provide the benefits rather than chemicals. Sorry for that investment failure.

        I am also sorry that 30 new clinical tests in GeneTests in 30 days is insufficient for you on the testing front. What rate do you need diagnostic tests churned out to save the economy?

      • Mike Mandel says:

        I appreciate all the information, but I’m not sure of what you are trying to say. You seem to want to say that it was too early to expect results; that there have been plenty of results; and that it doesn’t matter anyway to the economy.

        On the first two, I’d say that the science has progressed nicely, resulting in multiple leads. I’d also say that investors, most pharma companies, and a decent number of reputable scientists expected more commercial results than they got over this time frame. A decent number of reputable scientists believed that it would take longer, and they turned out to be right.

        I think that you and I could probably agree on the basic story up to here, with some quibbles. I’d have to restate my hypothesis more clearly, and we’d have to agree on the time frame.

        But where we disagree is about the economic importance of events in the genomic sphere. I think that the medium-run future of the U.S. economy is closely linked to commercial progress in life science, broadly defined. Would you like to disagree with that statement?

      • I said it was too early to have expected Alzheimer’s drugs to have saved the planet, yes. And then you said that if you even had evidence of stuff in Phase I it would be vuvuzelas in the streets. So I showed you all those genomics companies pipelines, with drugs in various phases. I’m not hearing vuvuzelas at my house this morning….

        I hope that progress in genomics and health start to come along. And I hope it does benefit the economy and the humans. But I don’t buy that the employment levels and import gap that you highlight justified your “nomination for the most significant economic event of the past decade”. I’d have to see more data on other drivers–how did other fields do in the last 10 years? Why is commercial life science so tightly linked and responsible for carrying the economy? I don’t think the evidence shows that. Did it really carry it before the HGP? Looks to me like there’s a trough in the mid-90s that was well before the current failure. What failed then?

        But I’m happy to see more data. I love data.

      • Patrick says:

        Along Mary’s thread, I was going to mention Herceptin as a genome winner, but alas, approved in 1998. But there are now a few like this, where the label&marketing specifically say what genetic types are advisable, making products that would not be acceptable for broad-label marketing suitable for narrow label marketing.

        Maybe the larger story isn’t the human genome project but declining returns to R&D in drug discovery. Normally the technology story is that increasing direct returns to R&D lower prices and provide larger pie gains to society (Moore’s Law, etc.). Each Moore’s Law cycle has involved larger $ investment but lower R&D cost per unit product, as unit volume skyrocketed. In this case, we’ve clearly reached a plateau where in order to justify the inordinate risks and small number of patients with the target indications, prices have increased geometrically. To give decent returns to successful development, prices have climbed so much such that the net benefit (total pie) of each new drug is zero or negative. A big part of the explosion of post-WWII pharma discovery was opening up the incredible compound knowledge of European chemists to American pharma research techniques. Benzodiazapenes came out of the Polish dye industry and exposed a whole class of previously unknown receptors in the brain. There just isn’t a similar pool of unexplored classes of compounds these days.

      • Patrick says:

        However, supporting Mary’s point, clearly the conditions for research have changed, and government regulations are much more of a factor than in the past. Compare the ending of all gene therapy trials in the US after the UPenn disaster to the testing of nitrogen mustard compounds in concentration camps, leading to the development of a lot of modern chemotherapy, and the world has changed quite a bit.

      • Patrick: Re declining/diminishing returns – this is what I have been harping on for a long time, the effort and sunk cost investments don’t scale linearly with the rising technological bar, and aside from technical difficulties pushing the envelope there are social limits/rigidities. The latter include management paradigms of large organizations, and not unrelated the financial and socioeconomic environment. We can continue pushing the envelope further from a technical perspective, but many things will not be attempted for lack of profitability prospects, at the macro as well as micro levels.

      • Mike,

        Jumping in late here, after seeing Derek Lowe’s post over at In The Pipeline.

        On the one hand, I think we can all wish for more progress in diagnostics and therapeutics, since 2000. Especially for therapeutics. Of course, it’s already been noted that therapeutic development times are long, but I also agree with you that many prominent folks overpromised on how fast the HGP would deliver new therapies.

        On the other hand, there have been significant successes in diagnostics. One I have in mind is the Oncotype DX Breast Cancer Test developed by Genomic Health. This is a test that looks at expression levels of 21 different genes in tumor samples and allows women with certain types of breast cancer to decide whether they need chemotherapy after a lumpectomy, or whether chemotherapy can be safely omitted. You can read more about the test itself here. Note that they explicitly credit the role of the HGP in test development. (Disclosure: I have no financial interest in this test or the company. It’s just a story I’m familiar with, and it’s pretty cool science.)

        I don’t know if you consider that a “breakthrough” success story or not (at least for Dx). My overall opinion is that it’s too much to expect that just one or a few breakthrough successes could boost the entire economy, but it is fair to note that we haven’t (yet) had nearly as many successes at the more optimisitic HGP promoters promised.

        Whether that means we’d currently be better off if we hadn’t invested in HGP and genomics is a much tougher question to answer.

      • Mike Mandel says:

        I just want to get one thing straight. I’m very glad we invested in the HGP and genomics. I don’t think we should have invested less, and I’m very willing to entertain the possibility we should have invested more. That includes more direct support for graduate students and young scientists.

  9. I would like to point out a slightly different take.

    That would be that these advances will never lead to cures of anything but the lowest of hanging fruit.

    Just as a person will never be cured of lung cancer if he continues to smoke, these cures of cancer, diabetes etc will never happen if the person continues with a bad diet and little exercise. There will never be serious progress in this area until we realize that prevention is the only way.

    Now if they could clean up the Gulf with some bio remediation trick that would be great.

  10. Michael, you maybe missing a disconnect:
    – Modern medicine is based upon the assumption that people – patients – are mostly alike. As a surgeon you will know what you will find and where you need to fix or remove something. Drugs have the same effect on all patients. That is also what the summit of modern medicine, the randomized clinical trial, is based upon – it assumes all patients have essentially the same makeup, so you can use statistics based upon Gaussian distributions. Same for epidemiology, public health, big pharma and other success stories – all based on people being similar and the laws of large numbers.

    – Genomics is based upon the assumption that people – patients – are different. You have differences in how people look, respond etc, and you find genes that associate with these differences. The promise is great, but the approach is entirely different, treatments will be for specific groups of patients that first need to be found. Thus, genomic medicine may require entirely different institutions, that can deal with patient-specific medicine, with drugs different for every patient etc.

    It may take much longer than you seem to expect to turn this around – and in fact I have not yet seen the beginning of this.

    If you are willing to rename your proposed conference ‘Fixing Pharma and Biotech’ I would be very interested.

  11. wasn’t it silly to spend so many $$ on sequencing, when it’s so much
    cheaper now ? Just waiting 20 years would have saved lots of money.
    And not so much delay in % of evolution time

    • Isn’t that kind of like saying we shouldn’t have done the Apollo program because if we had only waited till 1969 and we could have made it to the moon with out all that hassle?

      Research, innovation and scale drive prices down. Not time.

      Sequencing pricing went down _precisely_ because the money and effort went into sequencing and sequencing technology.

      • I think that was sarcasm.

      • only parts of the investment helped to reduce sequencing cost.
        If that had been the purpose then why didn’t we concentrate on that ?

        Like making computers cheaper and faster first instead of solving
        time intensive problems at once.

        Apollo was ~70% useless (my wild estimate), the other 30% had
        indirect positive effects

  12. trying to find genomics shares …
    human genomics science is the only bigger company that I found

    not so bad. Apparantly they are not so much disappointed by the achievements
    of the last 16 years ?!

  13. Here is a good response “getting what you pay for”:

    • Mike the Biologist makes great points. And makes the think of the data that I need to see to be convinced that the alleged HGP failure is the biggest economic event of the last decade.

      Mike the Economist: can you show me the cost of the HGP, vs the ROI? At the same time, show me the cost of the wars, the bank bailouts, the housing crisis, and their ROIs? Or pick specific equivalent sized projects–say maybe something funded by the Pentagon, or NASA, and compare those for me with their ROIs?

      • The wars just aren’t a comparable investment. When the country undertook these two wars, it was trying to accomplish three rather broad objectives: 1. eliminate the power of sets of combatants to threaten our country, 2. maintain international respect for the US’s ability to project military power wherever in the world it needed to, and 3. create new, comparatively friendly governments to replace the ones we destroyed. #1~ al-Qaeda is not an operational force anymore. #2 ~ Our closest military competitor, China, could not even mount a serious operation past Taiwan range and is dependent on the US to secure Singapore Straits and Strait of Hormuz. In some ways, our current ability to project military power is unparalleled in history. #3 ~ crappy performance, but still, considerable better than what we started with. And I didn’t support the Iraq war.

        Much better comparison is to the Constellation / Moon & Mars NASA program. Discrete objective: return the US to exploratory manned spaceflight. Progress ~ meh. We’ve spent several times the cost of HGP and gotten a couple test rockets in return.

        Mike the Biologist’s post talks about the great progress in sequencing made as a result of HGP, but again, returns to human health (the ultimate objective) from have been minimal. But I guess the same could be said about “the war on cancer”, which has managed to decrease cancer death rates by about 5%, at a cost of $105B over 40 years for NCI alone.

      • But Patrick: Mike’s premise is that the failure of HGP is the most significant economic event of the decade. It wasn’t qualified by: medicine, or biology, or science at all. That’s why it is so egregious.

      • Mike Mandel says:


        My only sin is that I view research and innovation as being economically vital–not just important, but the very lifeblood of our economy. I’ve been very consistent on that point for years. But as an innovation-driven economy, unfortunately the U.S. is tied to the vagaries of the research-development-commercialization cycle.

        The flip side–if genomics is successful over the next decade in generating high-impact treatments and outcomes, that will turn out to be the most significant economic event of the 2010s. Anything we can do to encourage that result is a good thing.

      • Agree with Mike that an unfortunate component of an innovation and research-based economy is that science is not a linear process, yielding consistent benefits over time. Instead it involves very large speculative investments with uncertain, potentially large returns. When they do work out, it’s huge. When they don’t, well, we all bear it.

        This does not mean that all speculative investments are created equal and can not be compared to each other. I have to wonder if we’ve reached a plateau in biomedical progress, where throwing an extra $50B at a problem set is only likely to yield small gains. It’s like if all of late Medieval Italy decided to devote themselves full-time to alchemy; a concentrated national effort does not necessarily yield its desired goals in the face of insurmountable near-term challenges.

  14. Dr. Dave says:

    I am a Pediatrician in private practice for 35 years. I have watched as many so-called scientists have made many bold predictions about where the knowledge of the human genome will take us. I have known from the beginning that this is mostly egotistical hot air. Here’s the problem. Uncoding the base sequence of human genes actually tells us almost nothing. No one seems to have to slightest idea how decisions are made at the molecular genetic level. No one knows where and when operator genes start and stop. No one has a working model of how such genetic coding could have come into existence, let along how it works. In fact, I don’t think anyone has the slightest idea how any of this works. Copying a complicated base sequence and putting it in a bacterium to make insulin was a heck of a great accomplishment, but it hardly counts as understanding how it all works. We are just copying an existing gene and borrowing the unbelievably complex E. Coli’s hardware. We are likely centuries away from real dramatic progress. And I’m not sure that what occurs at the molecular genetic level is even understandable.

    • CompEng says:

      Makes sense. Of course, if we ever do want to understand how it works, we had to do this first, didn’t we?

  15. Mike Reardon says:

    There seems to be a firm a across the board push for fiscal restraint of any new Government direction. I’m not thrilled, but it seem we will live with restraint of investment by Government. There may only be private support in the markets.

    R&D not clearly market oriented like HGP may have lost a lot of leverage in this Congress. For the next 5 to 10 years its may only be the markets deciding these investment valuation.

  16. In terms of “Fixing Pharma” I believe the biggest “structural impediments to successful application of genomic knowledge” as well as other drug R&D endeavors is a fairly general lack of significant science knowledge and leadership at executive levels. The Pharma industry has changed from being lead by medical, science and engineering types to predominately those from business/MBA, legal and sales/marketing. Focus is not on long term and even patient needs but towards immediate next quarter success. There has been many “chasing new paradigm” in addition to genomics for easier, faster and cheaper drugs without true evaluation of probable practical applications and real time cycles to achieve progress that were rooted in over-hyped technology being sold to those who could not discern, or perhaps choose to ignore, the issues of transitioning promising science in to bedside treatments.

    Of course on the other hand I see much of Biotech as proof that too much “scientist in charge” can be just as unsuccessful for new drugs so really need a mix and balance of disciplines because everything involved is very complex and no one has a time machine so can jump to the future and figure out (or bring back?) what works.

  17. Mike: Is the failure of biotech a result of a failure to innovate, or rather a failure of our government to invest in the right innovations? I would suggest that though we have generally funded basic biology research reasonably well, and though our pharma companies have been among the largest in the world, we still have an unfunded gulf between academic biology research and pharmaceutical company uptake. Since 2005, Pharma has restructured to reduce spending on internal R&D and looked to fill its pipeline through acquisition of late-stage biotech companies and clinical-stage drugs. VC companies have also shifted their funding focus away from early stage (preclinical) companies and towards the less risky clinical stage companies.

    Plenty of academic discoveries are made each year – discoveries that COULD lead to beneficial new medicines, yet increasingly, basic discoveries in academic centers are not funded by government grants or VC/angel investment – and simply die for lack of “proof-of-concept” funding. The gap between discovery and commercialization is commonly known as the “Valley of Death” for a good reason. There is little incentive (or experience) within most academic settings to begin commercial development of new pharmaceutical products or diagnostics, and lacking grant support for early-stage “development work” and not yet meeting the risk-threshold for VC/pharma uptake, many worthy drug development projects focused on novel new targets and mechanisms simply die – a real waste of the basic R&D dollars this country invests.

    We need a mid-stage “development” organization to professionally prioritize and develop (or thoroughly vet and kill if warranted) academic innovations – to move worthy discoveries to a stage where pharma or VC-funded start-ups can take over.

  18. Greetings! I know this is kinda off topic however
    I’d figured I’d ask. Would you be interested in trading links or maybe guest authoring a
    blog post or vice-versa? My website discusses a lot of the same subjects as yours and I believe
    we could greatly benefit from each other. If you
    are interested feel free to shoot me an e-mail. I look forward to hearing from you!
    Great blog by the way!


  1. […] Mike Mandel has an interesting nominee for the most significant economic event of the past decade: the failure of the Human Genome Project to become the medical and financial blockbuster that everybody expected ten years ago. […]

  2. […] On the failure of the Human Genome Project to deliver “medically significant results.”  (Mandel on Innovation) […]

  3. […] Mike Mandel has an interesting nominee for the most significant economic event of the past decade: the failure of the Human Genome Project to become the medical and financial blockbuster that everybody expected ten years ago. […]

  4. […] always interesting Mike Mandel has an interesting post linking structural problems in the American economy to the failure of the Human Genome Project to provide […]

  5. […] this award, I nominate this tidbit: My nomination for the most significant economic event of the past decade:  The failure of the […]

  6. […] Mike Mandel has an interesting nominee for the most significant economic event of the past decade: the failure of the Human Genome Project to become the medical and financial blockbuster that everybody expected ten years ago. […]

  7. […] on Innovation and Growth blog, says the most "significant economic event of the past decade" is the "failure of the Human Genome Project to deliver medically significant results." Ballooning healthcare spending, low job growth and a big trade deficit are strangling the US […]

  8. […] around here: the failure of the Human Genome Project to jump-start drug discovery as the “most significant economic event of the past decade“. (Thanks to Jonathan Gitlin for the […]

  9. […] provocative title The Debt Crisis and the Human Genome belies Mike Mandels underlying message. I do worry that articles like this and the recent NY Times […]

  10. […] around here: the failure of the Human Genome Project to jump-start drug discovery as the "most significant economic event of the past decade". (Thanks to Jonathan Gitlin for the […]

  11. […] around here: the failure of the Human Genome Project to jump-start drug discovery as the "most significant economic event of the past decade". (Thanks to Jonathan Gitlin for the […]

  12. […] Posted in biosciences by Mike Mandel on January 23, 2011 Back in June, I argued that the most significant economic event of the past decade was “the failure of the Human Genome Project to  thus far deliver medically significant […]

  13. […] to be heard. We justified the $3-billion by pointing to promised outcomes. But the biotech industry didn’t become the next Silicon Valley. “Personalized Medicine” remains a promise for some future date. And the results […]

  14. […] funding that has gone into bio-sciences without any significant return. The bio-tech industry didn’t become yet the next Silicon Valley, and the research did not lead to new companies, jobs, or economic growth in general. But does […]

  15. […] reading Mandel’s good books and articles for years and took notice when last summer he offered this contrarian gem: “My nomination for the most significant economic event of the past decade: The failure of the […]

  16. […] What about jobs? Successful new innovations create new jobs–that’s what history tells us. If the Human Genome Project had led to a wave of new diagnostic test and treatments, the jobs would have followed.  Instead, what happened is that the pharma industry invested heavily in ‘genomics’ and got hit hard when it didn’t produce a flood of new diagnostics and treatments.  As a direct result, big pharma companies have been merging and laying off workers, not adding them. When’s the last time you heard someone talking about biology as a hot field for jobs? […]

  17. […] my thoughts about both the science and hype surrounding the HGP, so I don’t have to. But this post by Mike Mandel has been getting some […]

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