The Mental Health Crisis is estimated to cost the global economy over $1 trillion per year in lost productivity
The COVID-19 pandemic has seriously worsened this crisis
Mental health services is already a $225 billion treatment market in the U.S., but lacking effective therapies
How much is mental health worth? Perhaps the question needs to be framed in more intimate terms.
How much is your mental health worth? The answer from most people would be “priceless”.
We can cope with many kinds of physical defects with only minor impairment in quality of life. But succumb to some mental health disorder – anything from depression to dementia – and our lives can be devastated.
How much do mental health problems cost? We can’t put a price tag on the loss of quality of life. But we can do so with respect to the economic costs.
$1 trillion per year.
That’s how much the World Economic Forum estimated that we are now losing every year in lost productivity alone (as of 2018). And this is only due to stress-related mental health disorders like depression, anxiety, addiction and PTSD.
Extrapolating from this, the Lancet Commission predicted the global economy would suffer $16 trillion in lost productivity between now and 2030 due to those mental health issues.
There is also a major opportunity here.
According to Statista, “mental health services” is already a $225.1 billion treatment market in the U.S. (projected to rise to $238.4 billion in 2020).
Fortunately, a potential remedy for this mental health crisis is now clearly visible on the horizon. An emerging life sciences sector shows enormous promise in addressing this looming economic catastrophe – and capturing a large share of the mental health services market.
More on this later.
The Mental Health Crisis
This was the mental health scenario before the COVID-19 pandemic struck. Thanks to the emotional and economic strains caused by the coronavirus (and associated lockdowns), rates of depression and anxiety have skyrocketed in the U.S. and around the world.
The World Health Organization has now officially labeled this a “Mental Health Crisis”.
It’s a crisis in terms of the economic costs. It’s also a crisis in terms of the vast numbers affected.
Over 1 billion people suffer just from depression, anxiety, addiction, or PTSD. And existing therapies for these afflictions are generating mediocre success rates.
Roughly 1 billion people are addicted to nicotine. In the United States alone, this is responsible for nearly half a million deaths every year. By comparison, COVID-19 itself has caused (as of this writing) less than 200,000 deaths in the U.S.
That is only one side of the Mental Health Crisis. The other dimension to this Crisis is cognitive decline.
According to the CDC, by 2011 more than 16 million Americans were already estimated to be suffering from some form of cognitive decline – well over 5% of the population. Today, the Alzheimer's Association estimates that over 5.8 million Americans are suffering from Alzheimer’s disease alone.
Globally, this projects to hundreds of millions of people suffering from cognitive decline.
The economic cost?
In the U.S., caring for an Alzheimer’s sufferer starts at $20,000 per year, rising to over $40,000 per year by year 4 – according to the American Journal of Managed Care. And as the global population ages, the numbers affected by cognitive decline can only go higher.
Hundreds of millions of additional sufferers (globally). Hundreds of billions in additional economic costs each year.
A solution to the Crisis
What rapidly evolving life sciences sector is rising up as the best hope to address the Mental Health Crisis?
What branch of medical research is emerging out of the shadows after roughly 50 years of criminal Prohibition?
Psychedelic drugs.
The psychedelic drug industry is already well-advanced in clinical trials to bring to market new (and better) treatment options for depression, anxiety, addiction and PTSD.
This research is taking place with respect to substances like psilocybin, LSD, ayahuasca, MDMA, ibogaine, and even ketamine.
Perhaps the greatest amount of excitement is being generated from the drug psilocybin. Psilocybin is the powerful psychoactive substance contained in “magic mushrooms”.
Compass Pathways, which has filed for a NASDAQ listing (symbol “CMPS”), is in Phase 2 of a clinical trial to use psilocybin-assisted therapy for treatment-resistant depression.
Encouraging results in early clinical testing motivated the FDA to grant Breakthrough Therapy Designation for this research. This will expedite moving through Phase 2 and (very likely) Phase 3 of the clinical trials process.
Clinical trials are expensive and time-consuming
Even with regulatory fast-tracking, the total costs to bring a new drug to market can range above $100 million – and still require years to complete clinical trials.
The psychedelic drug industry will be needing to raise $100s of millions in funding across a multitude of psychedelic drug research initiatives. At the same time, multinational drug companies – more commonly referred to as Big Pharma – have been stepping back from research into drugs for mental health disorders.
By 2016, The Guardian was reporting that these multinational drug companies had already slashed funding for mental health research by 70%.
On the one hand, this leaves psychedelic drug research for mental health as a largely open playing field for junior pharma companies. On the other hand, it places an onus on these emerging companies to engage in some serious capital-raising.
Difficult. But not impossible.
Making such funding feasible, major players from both Silicon Valley and Wall Street have been stepping forward to raise capital – and even commit personal funds to this R&D.
Corporate icons like Peter Thiel, Mike Novogratz, Tim Ferriss and others are early and enthusiastic investors in the psychedelics space. Compass Pathways itself is expected to raise in excess of $100 million for its IPO.
Even with strong interest from the marketplace, making it from start to finish in the clinical trials process is a daunting proposition for these psychedelics startups.
This is prompting some of the new players in this space to add an additional dimension to their operations.
Stepping stone to psychedelic drug research
The mission: develop next-generation (psychedelic-based) medical therapies to treat a Mental Health Crisis that is already costing the global economy over $1 trillion per year. Capture the $225 billion mental health services market.
The problem: raising many millions in funding to bring these drugs to market and funding this research for several years along with day-to-day administrative costs.
It can easily turn into a dilution trap for these junior life sciences companies as they do their clinical research on magic mushrooms and other psychedelics.
The answer? More mushrooms.
Functional mushrooms.
This is a large-and-growing niche in the enormous dietary supplements space. Functional mushrooms are already a $23 billion market, according to Mordor Intelligence (Functional Mushroom Market 2020 – 2025).
This is more than just a convenient means for psychedelic drug companies to generate robust near-term revenue streams. There are also genuine synergies here.
Psychedelic drugs are being researched primarily for their efficacy in treating mental health conditions. But there is also psychedelics-based research into using these drugs to treat physical ailments like headaches and pain.
Mental health synergies
Similarly, functional mushrooms are being consumed primarily for their numerous touted benefits for our physical health. But they are also being heralded for their potential in improving our mental health.
A previous Psychedelic Stock Watch article covers the functional mushroom market.
Functional mushrooms are being widely touted for physical health benefits – especially boosting our immune system. And naturopathic research here is also uncovering important mental health benefits.
Functional mushrooms promote brain health through supporting the growth and maintenance of neurons. It is the deterioration of these neurons that leads to Alzheimer’s disease and other forms of cognitive decline.
This is not mere folklore.
In an interview with Joe Rogan, Paul Stamets discusses the clinical research showing how (in particular) Lion’s Mane mushrooms have been shown to promote neural health and even reverse previous neural damage.
Potent business model
Psychedelic drugs are being tested to treat Alzheimer’s disease. Functional mushrooms show great promise in helping to prevent such cognitive decline.
Tero Isokauppila, author of Healing Mushrooms, identifies a different synergy between functional mushrooms and psychedelics.
As noted above, psychedelic drugs are being hailed for their potential to treat stress-related mental health disorders like depression, anxiety, addiction and PTSD.
Isokauppila points to the “adaptogenic properties” of the Reishi (functional) mushroom as a means of helping us manage/cope with stress.
Psychedelic drugs to treat stress-related mental health conditions. Functional mushrooms to help prevent the same disorders. More synergy.
Mental health services is already a $225 billion treatment market. Psychedelic drugs have great potential to capture this market as R&D advances.
Functional mushrooms are already a $23 billion market. And psychedelics-functional mushroom hybrids can target this market today.
A strong business model for a huge opportunity.
An investing roadmap for the Mental Health Crisis.
