Background.  The net value of increased health care spending remains unclear, especially for chronic diseases.

Objective. To assess value for money spent on medical care for patients with type 2 diabetes, using a “cost-of-living” approach.

Setting. Mayo Clinic Rochester, a not-for-profit integrated health care delivery system. 

Patients. 613 patients with type 2 diabetes: 36 diagnosed before 1985; 186 in 1985-96; 181 in 1997-99; and 210 in 2000-02.

Design. We compare the increase in inflation-adjusted annual health care spending with the value of changes in health status between 1997 and 2005.

Measurements. Measures of health status are (1) cardiovascular risk based on the United Kingdom Prospective Diabetes Study (UKPDS) equations, holding age and diabetes duration constant (“modifiable risk”); and (2) simulated outcomes for all diabetes complications using the UKPDS Outcomes Model. The present discounted value of improved survival and avoided treatment spending for coronary heart disease (CHD), net of the increase in annual spending per patient, yields net value.

Results. We estimate a total value of $20,824 per patient for quality improvement ($17,392 from reduction in modifiable risk of fatal CHD and fatal stroke, $3,432 from avoided CHD treatment spending), and a value net of cost of $10,911 per patient (95% confidence interval -$8,480, $33,402). A second approach to assessing value, using the UKPDS Outcomes Model, yields a net value of $6,931 per patient.

Conclusions. Our estimates of net value are positive, indicating that value for money has improved, although confidence intervals bracket zero. The increase in spending thus appears “worth it” on average, but there remains considerable room for enhancing value for money in care for patients with diabetes.

Aims The prevalence of Type 2 diabetes mellitus (DM) has grown rapidly, but little is known about the drivers of inpatient spending in low- and middle-income countries. This study aims to compare the clinical presentation and expenditure on hospital admission for inpatients with a primary diagnosis of Type 2 DM in India, China, Thailand and Malaysia.

Methods We analysed data on adult, Type 2 DM patients admitted between 2005 and 2008 to five tertiary hospitals in the four countries, reporting expenditures relative to income per capita in 2007.

Results Hospital admission spending for diabetic inpatients with no complications ranged from 11 to 75% of per-capita income. Spending for patients with complications ranged from 6% to over 300% more than spending for patients without complications treated at the same hospital. Glycated haemoglobin was significantly higher for the uninsured patients, compared with insured patients, in India (8.6 vs. 8.1%), Hangzhou, China (9.0 vs. 8.1%), and Shandong, China (10.9 vs. 9.9%). When the hospital admission expenditures of the insured and uninsured patients were statistically different in India and China, the uninsured always spent less than the insured patients.

Conclusions With the rising prevalence of DM, households and health systems in these countries will face greater economic burdens. The returns to investment in preventing diabetic complications appear substantial. Countries with large out-of-pocket financing burdens such as India and China are associated with the widest gaps in resource use between insured and uninsured patients. This probably reflects both overuse by the insured and underuse by the uninsured.

Biotechnology (or biotech) has impacted almost every aspect of human life. It has reorganized industries, drastically changed healthcare, helped to improve the environment, and led to important changes in laws and ethical norms.

Among the various biotech fields, medical biotech has been by far the most influential, beneficial, and controversial. It has generated not only superlative discoveries to improve the lifespan and quality of human life, but also the greatest amount of wealth for all the players involved, and the greatest volume of public debate.

Several important trends are shaping the future of the pharmaceutical (or pharma) and biotech industries. The biotech industry is characterized by the presence of strong clusters in all countries. The pharma and biotech industries are experiencing an outsourcing phenomenon, mainly due to a lack of in-house expertise and efficiencies. Diagnostics and therapeutics are increasingly converging, a trend that will lead to predictive and precise diagnostics and personalized and preventive medicine. The first few years of the twenty-first century have witnessed significant changes in the pharma/biotech alliance landscape. Today we are seeing the “omic”-ization of the biotech industry: most of the emerging technologies are genomics, proteomics, cellomics, and pharmacogenomics. In addition, the biotech industry faces uphill ethical issues, including excessive marketing, third-world drug availability, genetic engineering, stem cells, and cloning.

The medical biotech industry faces several challenges. First, science, the human body, and disease are, essentially, complex. Second, unlike other high-technology industries, the biotech product development cycle is very long, even after proof of concept. Biotech projects take between ten and twenty years to become successful and cost over $200–300 million before a product reaches the market. Third, delivery of most biotech products and therapies is complex and can be painful, often involving intravenous delivery. Fourth, the preceding three factors pose significant challenges for research and development (R&D) financing. In addition, there are certain outside determinants that influence the biotech industry, including regulation, demography, reimbursement climate, and big pharma companies.

Stem cell research is one of the most fascinating areas of biology, but it raises questions as rapidly as it generates new discoveries. The greatest potential application of this research is the generation of cells and tissues that can be used for cell-based therapies. A stem cell is a special kind of cell that has a unique capacity to renew itself and to give rise to specialized cell types. Through the process of differentiation, stem cells form various tissues and organs, and the combination of these differentiated materials develops into the whole human body. This class of human stem cell holds the promise of being able to repair or replace cells or tissues that are damaged or destroyed by many of our most devastating diseases.

Diabetes mellitus is a group of diseases characterized by high levels of blood glucose resulting from defects in insulin production, insulin action, or both. Diabetes mellitus is a type I diabetes—also called juvenile-onset diabetes or insulin-dependent diabetes—and develops when the body’s immune system destroys pancreatic beta cells, the only cells in the body that make the insulin that regulates blood glucose. Type II diabetes, also called adult-onset diabetes or noninsulin-dependent diabetes, may account for 90–95 percent of all diagnosed cases of diabetes. There are more than 194 million diabetics worldwide, with this number expected to exceed 333 million by 2025.

Insulin is currently the most effective drug for controlling hyperglycemia and is widely accepted as the gold standard for treating type I diabetes and even late-stage type II diabetes. However, physicians and patients are reluctant to use insulin until other less effective drugs have been attempted. This is mainly because insulin therapy is invasive and painful: patients must take insulin intravenously.

One of the most promising ways to cure diabetes is to restore the function of islet cells biologically, either through islet cell transplantation or by engineering cells to restore the insulin secreting function. Islet transplantation, a procedure that can restore insulin production in patients, is a highly promising area of research.

Based on analysis of stem cell research, diabetes market opportunities, and the development of stem cell therapies, it is possible to place a value on a company in the early (preclinical) development stage of a stem cell therapy for diabetes. Such an exercise involves valuing a company based on three different approaches—(1) the discounted cashflow model, (2) the royalty or licensing model, and (3) the comparables valuation model. Sensitivity analysis based on market, pricing, costing, R&D, and development stage can further lead to precise valuation range for a given company.

For biotechnology companies, various drivers play a critical role in company valuation, including people (management team), alliances and partnerships, intellectual property rights, R&D and technology, funding and financing, market opportunity, and therapeutic area.