Psychedelic Drug Development Or Clinics: Which Is The Better Path To Investor Profits?

The psychedelic drug industry is starting to develop. Increasing numbers of public companies in this sector have commenced trading.
As the industry evolves, investors are being presented with (primarily) two alternative business models.

  1. A focus on drug development
  2. A focus on psychedelics-assisted mental health clinics

Naturally, there are also some companies with hybrid business models that are combining drug development with clinic operations.
Investors looking at the profit potential of this emerging sector seek to answer an elementary question. Which facet of this industry offers the greatest investment potential: drug development or clinic operations?

To answer this question, Psychedelic Stock Watch is taking a look at both branches of the industry. We also reached out to a couple of the public companies for their thoughts on the merits of each approach.

Drug development and clinic operations: targeting huge markets

Investors will likely already have read some of the reports of the spectacular successes in clinical trials of psychedelic drugs. Before weighing drug development versus clinic operations, it would aid investor’s perspective to have some overall parameters for the industry.

a)Size of the treatment population
b)Size of the treatment market(s)
c)Wide-open playing field
As Psychedelic Stock Watch has reported, psychedelic drug development initiatives are already moving far beyond the boundaries of mental health care, and into many general (and large) healthcare treatment markets.

However, for the purposes of this article, we’ll focus only on the treatment population with respect to mental health-related conditions. Even in the realm of mental health alone, the numbers are staggering.

The “Mental Health Crisis” only spotlights stress-related disorders like depression, anxiety, substance abuse and PTSD. But over 1 billion people grapple with these issues alone, roughly 1 in 6 people on the planet.

Naturally, with this many people seeking treatment, the individual treatment markets are also enormous – all with multi-billion-dollar potential.

As the largest overall treatment market, U.S. numbers are most readily available. Altogether, roughly $300 billion is spent each year just in the United States on mental health drugs and services.

Most of that money is spent poorly.

Two-thirds of Americans exhibiting symptoms of depression don’t even seek treatment because existing therapy options are so inadequate. Two-thirds of the U.S. veterans receiving treatment for PTSD from the Department of Veterans Affairs obtain no benefits from their treatment. That’s a big reason why the U.S. Department of Defense is the world’s largest individual donor for psychedelic drug research.

The psychedelic drug industry has a wide-open playing field in mental health treatment. The same is basically true in drug development.

Big Pharma’s antidepressants are only effective for roughly half of those who are prescribed them, and one-third of that is merely the Placebo Effect.

Beyond that, multinational drug companies have largely vacated drug research into mental health. By 2016, Big Pharma had reduced its R&D in this area by 70%.

This is the current ‘competition’ for the psychedelic drug industry:

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Disclosure:  The writer holds shares in Cybin Inc and Mind Cure Health. Mind Cure Health is a client of Psychedelic Stock Watch.

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