Although each psychedelic substance, its effects, and its core chemical compounds are quite different, they have followed the trail blazed by the cannabis sector to mainstream acceptance and Wall Street excitement—especially psilocybin.

Psychedelic drugs are becoming an increasingly popular area of research and drug development. A market research report estimates that the sector could be worth more than $10 billion by 2027, growing at a compound annual growth rate (CAGR) of 12.36 percent from its value of $4.75 billion in 2020.

Most of the medical community has accepted that cannabis and psychedelics can potentially be robust treatment options for patients dealing with a slew of medical problems. For example, most agree that cannabis offers several positive benefits, like anti-inflammatory properties, while psychedelics like psilocybin are increasingly being used to treat severe, drug-resistant depression and other mental health conditions.

Psychedelics, also known as hallucinogens, include a range of compounds – some extracted from plants or fungi and others made synthetically - that can induce hallucinations if administered in sufficient quantities. The most commonly used psychedelic substances include ketamine, Psilocybin (the active substance in Psilocybe cubensis – colloquially known as ‘Magic Mushrooms’), Ibogaine, Lysergic Acid Diethylamide (LSD), Dimethyltryptamine (DMT) and 3,4-Methyl​enedioxy​methamphetamine (MDMA).

Psychedelic drugs are being evaluated for treatment for a range of serious neuropsychiatric and neurodegenerative disorders, including major depressive disorder (MDD), bipolar and anxiety disorders such as post-traumatic stress disorder (PTSD), as well as Alzheimer’s and Parkinson’s disease (AD and PD, respectively). The prevalence of these conditions is growing, as is the population of patients who have developed a tolerance to currently available treatments. And so, novel drugs that are based on natural substances such as psychedelics are becoming more widely studied, to provide a possible solution for such conditions of the mind.

The current treatment approach for helping people to live with depression and PTSD depends on administering medication whose doses gradually increase. This creates a large and dependent patient population and a cost factor that is becoming a burden on any healthcare system. This may help newer, drug-discovery companies in the psychedelic medicine space to gain larger acceptance, providing that the clinical trials’ results that are happening all around the world remain positive.

The traditional drugs that are currently used to treat major depressive disorder have serious side effects which eventually lead many patients to steer clear from using them. Effects such as obesity, lack of sexual desire and anxiety, are common. Also, another undesired outcome associated with these drugs is a very long intake time, meaning the time it takes for these drugs to take effect.

That’s why some companies are trying to offer a novel approach to treating mental conditions by leveraging the natural healing powers of psychedelic substances. Combining psychedelics with well-known, popular, and proven antidepressant drugs, may result in much better therapy outcomes for patients as they will induce fewer side effects while working at a higher efficacy. They will therefore also result in better patient compliance.

Mental illness is among the costliest medical expenses in the U.S., and it has a high cost to employers in lost productivity. In 2019, 51.5 million adults were living with a mental illness in the U.S. The number of people suffering from mental illness, plus the cost of drugs which is already in the tens of billions of dollars annually, are projected to grow in the years ahead– especially since COVID-19 has exacerbated mental health issues globally.

In the context of a post-COVID world, psychedelic health care will become an essential tool in the treatment of the population's worsening mental health issues. According to the mental health charity Mind, more than two-thirds of adults with mental health problems reported that their mental health worsened during the various lockdowns. What’s more, is that we still don’t have a full picture of how the pandemic and its accompanying lockdowns, have impacted and affected the general population’s mental health. In response, pharmaceutical companies are looking to significantly invest in new medical treatments to address said problems. Governments have also been encouraged to act swiftly to protect the welfare of their citizens.

Psilocybin is a realistic and proven alternative to traditional antidepressants. In the first direct head-to-head trial comparing psilocybin with traditional antidepressants, psilocybin was found to be as effective as the leading Selective serotonin reuptake inhibitor (SSRI), with significantly lower rates of relapse post-treatment. With this in mind, it’s only a matter of time before big pharmaceutical companies begin to incorporate psychedelics into their offerings.

Policy toward psychedelic use is also continuously evolving. We are likely to see the legalization of these substances becoming more widespread, making them an attractive option for investors as treatments roll out on a significantly larger scale.

As psychedelics begin to break into the mainstream, we can look to the emergence and growth of the cannabis industry as a glimpse of what is to be expected from the psychedelic medicine industry. As legislation, public opinion, and early investment move in an encouraging direction, it seems that lightning could strike twice for those brave investors who are once again willing to invest in this emerging field.

Written by Itay Hecht, CEO of PsyRx.