JP Morgan Healthcare Conference 2014 – Environment of Optimism


For the healthcare sector, JPM conference is the largest and most important event of the year.  Technology innovators and life science professionals come together with the business analysts and investors and significantly more transpires outside the halls of the Westin hotel and presentations rooms, then what goes on inside.  Inside, the companies begin their short presentations with disclaimers that their presentations will include forward looking statements and reality can be different.  The companies give a quick overview of how they met the goals, objectives, and milestones they had envisioned or how and why they failed to meet them.  The companies go on to succinctly talk about their goals, objectives and milestones for the year ahead.  They share about new technologies, products, or drugs in the pipeline, the kind of return shareholders can expect, and make a case for why they present a great investment opportunity.

Outside the conference halls, market opportunities are discussed, new product or technologies are pitched, licensing contracts are signed, and deals are done as suited professionals fill up SF hotel lobbies, coffee houses, and diners.  The networking does not stop in the evenings.  Instead, it picks up.  Various receptions hosted by law houses, life science companies, and investment firms at hotel penthouses and art galleries, offer opportunities to mingle and get to know people, in a less formal and more personal way.  As alcohol freely flows and finger food and attractive dessert choices loosen everyone, professionals find more ways to make deals.  In my next few reports, I will share more details from JPM conference and One Med Forum events.  But overall mood this year was positive and companies had less to apologize for.  Large pharma companies and smaller biotech and device companies are mostly done dealing with most dire recession challenges that hit the life science industry most deeply; nearly dried out funding sources, stagnated hiring, patent cliffs and lackluster period of growth that significantly lowered earnings.

Biopharma sector has enjoyed an incredibly good year, with 76.25% increase in value for the year, according to Bio World Blue Chip Index.  Funding has also begun to flow.  According to Bioworld Snapshots, the amount of capital raised by global private biotech companies was $4 B in 2013, up 4% on the total raised in 2012.  Almost $1.5 B was raised in 4th quarter of 2013, a huge 55% more than $975 million raised in the third quarter of 2013.  Biotechs also closed many venture rounds in Q4, 2013.  And there was a flurry of activity in the IPO market, with a number of IPOs with 2X the offering price.  So the good news is not just the number of IPOs, but their price, which has gone up 119% and their market cap which is up 236%.

But it will take a while for money to trickle down and spread more widely.  And many other challenges remain.  For instance, at 45 percent of the global R&D spend, although US still tops investment in life sciences, the amount has dropped 51% since 2007.  Meanwhile the cost of developing drugs continues to rise.  As one of the most scientifically and technologically advanced industries, life science sector still faces major challenges including stringent and constantly changing regulatory standards, rising R&D costs, and shorter market cycles.  Additionally, there are increasing cost pressures, a need to streamline business operations, and increasingly higher expectations from patients, doctors, payers and so on.  The environment at JPM was one of optimism, even exuberance, but it was also mingled with caution.  In my following posts, I will include highlights from various keynotes and some company presentations.

English: Category:JPMorgan Chase

English: Category:JPMorgan Chase (Photo credit: Wikipedia)

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