I keep coming back to one question: In our sector’s race to extract margin, are we sidelining the very engine that once ensured broad patient access: small molecules? I wrote down my three economic hypotheses.
1. Investor behavior isn’t strictly rational.
Biopharma isn’t an efficient market; too complex, too probabilistic. Early-stage investors often optimize for exit, not downstream value.
Patients access is often overlooked, and so are therapeutic areas of seeming importance (just consider antibiotics alone!).
That means faster modalities like small molecules can lose out to biologics that tell a better story on a roadshow, even if they’re slower or costlier to scale.
2. The investments models lack robustness.
Models are highly sensitive to sales assumptions, making projections at an early stage is inherently difficult, and a 2.5-3x difference in NPV between modalities is often seen as margin-of-error noise.
I have heard this too many times from too many investors.
Add uncertainty around technical success and platform value in small molecule R&D, and these models rarely steer early-stage decisions.
3. Investors view historic data as irrelevant to current R&D.
Historical averages don’t resonate when every biotech pitch is a always “non-average” outlier. Investors view past success rates as backward-looking.
Advances in precision, platform tech, and trial optimization make comparisons to legacy data feel stale. Many believe the old models don’t apply.
The result is a persistent skew in capital allocation, driven less by fundamentals, more by narrative, heuristics, and skepticism of the very tools designed to guide sound corporate strategy.
Would you offer an alternative perspective?