The biggest threat to modern medicine could be a big opportunity too

What keeps doctors and public health officials up at night? Ebola? Bioterrorism? A swine flu epidemic? The global obesity crisis?

All of these could be deadly. But they’re not the most pressing threat.

The scariest problem in medicine right now is all to do with one of the most mundane types of treatment we have – something that almost everyone reading this story will have used at some point in their lives.

We take it for granted. Yet without these medicines, we would be plunged back into a world where a small cut could turn into a death sentence and routine surgeries were highly risky.

The problem, of course, is antibiotic resistance. Here’s why it matters – and why it is a big opportunity for biotech and drug companies.

The biggest threat in modern medicine

Contrary to popular understanding, the first antibiotic-like drug was developed as early as 1907 – arsenic-based Salvarsan used to treat syphilis. However, it wasn’t until Alexander Fleming discovered penicillin in 1928, that their role in destroying bacteria began to be properly understood. It then took the medical demands of World War II for them to be made in bulk.

After 1945, when they first became available to the public, they transformed medicine by enabling doctors to deal with diseases like TB that were previously deadly. By enabling hospitals to quickly treat infections, they also increased the survival rate from even complicated surgery.

More controversially, antibiotics are used in food production. Dairy farmers give them to animals to reduce the number of diseases that occur in the cramped conditions that characterise most modern farms. They are even used on certain crops to control diseases. In both cases they have been used to boost yields, allowing cheaper production of food.

Sadly, antibiotics have one major flaw. Very occasionally the bacteria in an infection will produce a mutation that makes it resistant to the antibiotic. This is particularly likely if the treatment is not fully completed (that’s why the doctor tells you to take the whole course) or if they are used when they are not needed.

While resistance has always been a problem, the routine use of antibiotics, even for illnesses that they can’t help with, has greatly increased the problem. The use in agriculture has also made the problem worse by continually exposing people to low doses.

As a result, it is increasingly common for people with serious infections to contract strains that are resistant to one or more of the most popular antibiotics. In some cases doctors have even had patients die because a treatment couldn’t be located in time, or there was simply no drug that worked. At the moment antibiotic resistance is thought to cost the US healthcare system around $20bn a year.

Already scientists are contemplating how the end of antibiotics could affect medicine. Procedures that are currently common, especially in the elderly or others with weaker immune systems, would have to be curtailed, because they would simply be too risky. One expert predicts that hip replacement surgery could end up having a mortality rate of one in six (that compares with around one in 200 at present).

How to deal with antibiotic resistance

For now, doctors are being asked to prescribe fewer antibiotics in the hope that this will slow down the evolution of drug resistant bacteria. This week, Britain’s National Institute for Clinical Excellence (Nice) has suggested that GPs who keep over prescribing antibiotics should be hauled before the General Medical Council (the body that regulates doctors) and even struck off in extreme cases.

However, it’s going to be very hard to prove that a doctor is being excessive. Faced with pressure from a sick patient most GPs will understandably err on the side of caution. Nice also accepts that desperate patients will simply go to “soft touch” doctors, or even get the drugs themselves online.

Similarly, efforts to cut the use of antibiotics in US agriculture have foundered in the face of the influential farm lobby and the drug companies. European efforts could also be undermined if the TTIP trade deal leads to a lowering of food safety standards in the EU.

Another solution is to improve cleanliness standards in hospitals to reduce the number of infections. However, hiring more cleaning staff is expensive, especially when health systems around the world are facing pressure from aging populations.

So, in the medium term the only solution is to develop new antibiotics and hope to triumph in the arms race against resistance. Unfortunately for doctors and patients, while individual drugs have trickled onto the market, the last major group of antibiotics was discovered in the late 1980s.

Even worse, large drug companies have been moving away from this area for some time. For example, four years ago Pfizer closed down its antibiotic development unit. As a result, there are a relatively small number of potential antibiotics in the pipeline.

In order to increase the number of drugs in development, the US government is trying to make it more lucrative for companies. Not only have they cut the time needed to get an antibiotic approved, they have also extended the amount of time that they can be patent protected (and thus more profitable) for.

How to invest

The best way to profit from this is to buy into a company that is developing new antibiotics. The good news for investors is that the departure of the drug giants means that 80% of new antibiotics in the pipeline come from smaller biotech firms, making it much easier to find a pure play on drug development.

We’ll be looking at one specific company in next week’s issue of MoneyWeek magazine. If you’re not already a subscriber, you can get your first four issues free here.

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