The psychedelics renaissance that began in earnest a few years ago is showing itself to be a darling of biotech investors who see a great future ahead for psychedelics as a treatment for many mental health disorders, depression chief among them.
But really, who actually “owns” the psychedelics market today? Who or what is building the momentum? Who or what is actually convincing the consumer, or the patient, that psychedelics is worth a try? Who or what is driving the science? And what does that mean for the future of the industry? Let’s take a look.
– That random dude in apartment 3C. Psychedelics has always been the domain of the guy just selling stuff to make some extra money. That’s been going on since the late 1960s. Sure, the guy has your standard party drug (ecstasy or MDMA). Sure the guy has ‘shrooms. LSD? Yep. In fact, LSD use in the U.S. jumped 56.4 percent from 2015 to 2018, according to a study. The authors of the study suspect that many users may be self-medicating to find relief from depression, anxiety and general stress over the state of the world, as reported in Scientific American. Recreational use of MDMA and psilocybin has increased over the last year, supporting a belief that drug use needs to be seen as one of several lifestyle choices people make, integrated into other aspects of a person’s life, according to a global drug survey. The dude in apartment 3C is still at the right place at the right time. He might even have some other “designer” or synthetic psychedelics he wants to sell you. Is this guy driving the market? In a small sort of unmeasurable way, sure. This guy doesn’t need your ID or your doctor’s note. His market is anyone and everyone. What the guy selling psychedelics has done is make psychedelics a more mainstream party substance that joins cannabis and whatever else you want to do. His marketing plan? Buy it, try it, I got more. Let’s party.
– The researchers in the lab. The humble mental health and wellness scientist has hit upon a research bonanza with psychedelics, particularly psilocybin, MDMA and ketamine. They are discovering some very real help for some of the toughest human health conditions, like treatment-resistant depression, Alzheimer’s, and perhaps even Parkinson’s. One study is looking at using psilocybin to help overcome cocaine addiction. What’s more, the pandemic has encouraged more studies. For example, among the 96 psilocybin studies underway or planned now is one about using psilocybin for caregiver burnout. Promising results from trials with psilocybin and MDMA are forcing the FDA to come to terms with how psychedelics are approved—one of the latest trials using MDMA for PTSD may result in the FDA granting approval for treatment sometime this year after results of the second phase 3 trial. Are these discovery and regulatory actions driving the market? Yes and no. They are laying the groundwork for the huge market to come. But they have to get these wonder-psychedelics out of the lab first.
– The million-dollar startup crowd. Investors have been sniffing around the psychedelics industry for awhile now and creating the perfect storm of laying down big money while readying themselves for bigger money. There are more than 50 publicly traded companies related to the development or administration of psychedelic drugs in the U.S., with at least 3 valued at more than $1 billion. The market for psychedelic substances is projected to grow from $2 billion in 2020 to $10.75 billion by 2027, a growth rate that may even outpace the legal U.S. cannabis market. The payoff for investors who got in early is now in sight, and that payoff cycle—boosted by more research and a changing mindset among regulators as more states decriminalize psychedelics—could be very big indeed. Investors are talking about more mature entrepreneurs getting into the psychedelics space, bringing a new generation of business models and visions with them. Those billion dollar earning psychedelics-based drugs are coming. Yes, startups creating companies, or buying and selling and merging companies, are definitely driving the market. But all they own right now is the promise of something big to come. That promise is enough to bank on for now.