My MSc dissertation on healthcare derivatives

My MSc dissertation on healthcare derivatives

In 2019, I graduated with Distinction from the roller-coaster that was my one-year full-time MSc in Finance and Investment Management at the University of Aberdeen, Scotland.

Whilst still at uni, I wondered whether I would try and publish my MSc work in a peer-reviewed academic journal if the marking turned out alright. It seemed important to get a ‘proper’ publication out. Now that I have left academia (again), it doesn’t matter so much anymore. The process is too slow and arduous for a nice-to-have kind of thing. I have moved on, which keeps me busy. Also, I am not sure this piece of work is ready for an academic journal, and I don’t fully believe in the traditional way of academic publishing as discussed previously.

Even though I am slightly uncomfortable to share this half-baked idea here, my main motivation for releasing my dissertation is that I want smarter, more creative and experienced people to think about the topic and develop it. I had about 2.5 months to create something from scratch that was almost entirely new to me. The topic requires much more work and thought. Creating new pieces of this puzzle will bring us closer to a workable solution. That’s what idea exchange is all about.

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Here, I present to you my MSc dissertation:

Financing Biomedical Research with Healthcare Derivatives as a Potential Means to Reduce Therapy Prices


As drug prices keep rising, worries about future affordability of novel cures within existing healthcare systems increase. Rare disease therapy poses a particular economic challenge because it incurs high costs for only few patients. Life sciences investors demand high returns due to the significant failure risk in drug development. This translates into considerable research financing costs. High drug prices are to ensure timely returns for manufacturers before the expiry of their exclusivity protection, which staves off competitors. Whenever healthcare payers decide against covering therapy costs, the burden is passed on to patients. For future healthcare systems to cater for all patients adequately, innovative solutions are needed. This project investigates healthcare derivatives as a novel research funding source. It proposes a preliminary framework and trials its theoretical application in a hypothetical rare disease case study involving the world’s currently most expensive drug. The chosen scenarios indicate limited potential for healthcare derivatives in reducing firms’ financing costs but suggest that drug sales may be possible at cheaper prices. Healthcare derivatives may be more suitable for diseases with large patient populations. More detailed investigation and modelling is required.

The original complete file

Walk-through and some additional thoughts

The dissertation makes reference to organ futures about which I have blogged already (see part 3 below). I intend to take up some of the other background topics in future blog posts.

The organ donation series

2 thoughts on “My MSc dissertation on healthcare derivatives

    • […] yeast for research purposes. Gene therapy in humans is a hot topic and growing market. The to date most expensive ‘drug’ at over $2M a shot is a gene therapy for a rare disease. Another recent biotech milestone is […]

    • […] One may be tempted to tar and feather the greedy pharmaceutical industry for hiking prices. However, the economic complexity of drug development must be acknowledged. The current antibiotics crisis discussed in a previous post is but one example for the consequences of drug development becoming unviable for industry players. A sustainable balance between manufacturers and healthcare payers is needed. Novel ways of financing should also be envisaged. One suggestion involves healthcare derivatives, which I have explored in my 2019 MSc dissertation. […]

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