Report: Psychedelics Could Prove Too Subjective for Pharmaceutical Formulas

A paper, “The shifting fortunes of corporate psychedelia,” published in the September issue of Cambridge’s Finance and Society, suggests that the “unruliness [of] psychedelics as assets” could severely limit the capitalization of for-profit psychedelic medicines.

Published by Dr. Sandy Brian Hager, Reader in International Political Economy at City St George’s, University of London, the research suggests that traditional pharmaceutical business models will struggle to contend with the “unpredictable and intense subjective experiences” associated with many natural medicines. Additionally, as many of the substances occur naturally, the research notes that pharmaceutical firms will also face problems when pursuing drug patents and other intellectual property protections.

The report investigates the operations of five top for-profit psychedelic firms, highlighting an initial boom-to-bust trajectory across the industry after it effectively launched in 2016. Dr. Hager noted significant growth in the sector through to late 2021, driven by hype around growing bodies of research and the U.S. Food and Drug Administration (FDA) awarding breakthrough therapy status — which allows for expedited research — to psychedelic substances, including MDMA and a derivative of psilocybin. But the industry entered a subsequent bust phase after facing a series of setbacks, including weak trial results and the FDA rejecting an application for MDMA as a treatment for post-traumatic stress disorder (PTSD).

However, while industry trends were on the decline in 2024, the author noted that U.S. President Donald Trump’s return to the White House in early 2025 brought several longtime psychedelics supporters into key federal positions, including Secretary of Health and Human Services Robert F. Kennedy and FDA Commissioner Marty Makary. But investors remain wary of the industry, which “has produced a mood of ambivalence.”

“If [corporate psychedelia] ventures are to be profitable in the long-term, the analysis in this article suggests that companies must find a way to tame psychedelic unruliness, to bring these substances under the control of mainstream psychopharmacology.” — Dr. Sandy Brian Hager, excerpt from the article

Naturally occurring psilocybin has been decriminalized and regulated for therapeutic access in two U.S. states, Colorado and Oregon. In Alaska, petitioners are collecting signatures to put a ballot initiative to legalize natural psychedelics before voters next year. In Maryland, a legislative task force recently suggested that lawmakers take steps to decriminalize psilocybin and appoint an advisory body to create regulations for therapeutic access.