Therapeutic footprint
Nearly every novel medicine is brought to patients by commercial firms, owned in a significant part by institutional investors with broad beneficiary bases, such as pension funds. Savers- beneficiaries are therefore both owners-investors and patients-consumers. They are connected to the producing firms through a series of contractual agreements: an agreement between savers and their institutional investors - an investment policy - determines the savers’ capital allocation, among others, into the pharmaceutical firms; the contract between the institutional investors and the firms’ executives - a remuneration policy - determines the incentives and performance measures for drug development innovation. Commercial pharmaceutical research and development ought to create value for savers both financially (wealth gains) and clinically (health gains), yet only a small share of novel medicines represents a therapeutic advance over existing treatments. Can the contracts, such as investment and remuneration policies, be used to steer the direction of technological change andimprove the aggregate welfare outcomes, including both wealth and health gains? The contracts that organise and steer modern capital-markets-funded drug development are currently being reshaped by the reforms in the organisation of the capital markets themselves. These reforms - sustainable finance regulations - aim to connect the value creation for investors with value creation for the society and the environment. The research on the environmental outcomes of sustainable finance is aided by a common methodology to account for climate impact - carbon footprinting. This thesis instead explores how sustainable finance affects society, specifically in the healthcare domain, and introduces a methodology to account for health impact - therapeutic footprinting.