David H. Crean summarizes the recent 39th annual J.P. Morgan Healthcare Conference 2021 that was held in a virtual format, noting potential changes in format for future events. Crean does, however, underline the importance of the Conference for industry networking and highlights some of the biopharma topics to watch under the Biden Administration.
Compared to J.P. Morgan Healthcare Conferences in the past, this year’s conference, like many meetings in 2020, was 100% virtual. Public and private companies were making their presentations virtually rather than in the Westin or the numerous other venues around Union Square in San Francisco. In my opinion, “JPM week” felt more like “JPM month” which is not necessarily a bad thing. I believe along with others that this virtual meeting in 2021 could be the launchpad to making the J.P. Morgan Healthcare Conference week more inclusive and productive, an approach that has borne out at other investor meetings in 2020. It’s very possible that future meetings will adopt a hybrid model of in-person and virtual events. There is an enormous pent-up demand and people still desire to see the whites of other people’s eyes and shake hands that virtual events cannot effectuate.
As I noted in last year’s synopsis, JPM Healthcare Week has taken on a broader view beyond Jamie Dimon’s healthcare bankers and now entails multiple different conferences in adjacent locations that attracts early and mid-stage companies from the US and internationally looking to identify capital or for partnership deals and M&A. These adjacent events have popped up throughout JPM week to capitalize on the high density of biotech brainpower visiting the bay area. There are literally two dozen different events to possibly consider attending during the week, independent of the plethora of after-hours networking affairs sponsored by legal and financial advisors.
There is an enormous pent-up demand and people still desire to see the whites of other people’s eyes and shake hands that virtual events cannot effectuate
The virtual aspect will mean significant cost savings on hotels, travel, entertainment, and less pressure to cram every meeting into the span of three or four days. I think JPM week will always be an important event to kick off the new year, and 2021 will serve as a reset on how we can accomplish our goals through virtual networking while still being perceived as relevant in the industry. I am more in the camp of Carin Canale-Theakston and her article on reasons why JPM matters, or more broadly why networking still matters. JPM week is more than a banking conference. It’s not something that can be recreated virtually because its power rests in far more than hourlong presentations. Relationships matter even though there is a loss of the impromptu conversations and reconnections with people in the industry as you walk around Union Square or bump into at a networking event.
So, a question lingers, “are the days of J.P. Morgan in San Francisco gone forever?” Fierce Pharma wrote an article earlier this month and requested feedback to readers to get their input on the question. Whatever this event becomes in 2022 and beyond, I do not foresee the industry simply reverting to the way things were done before. From my perspective, even in its virtual form, this year’s event was top notch and that could open up for a world of future opportunities.
Important Topics During JPM Week
The pandemic still rages on in the U.S. with at +400,000 deaths, and more than 3,000 people dying every day from COVID-19. A key theme of JPM week this year was focused on the incredible accomplishments related to developments with vaccines, anti-virals and COVID-19 detection efforts. The industry’s biopharmaceutical companies have come together to achieve a shared goal: the eradication of COVID-19. The decades-long investments made in new technology, research and treatments prepared them to act swiftly. Rapid screening of vast global libraries of medicines to identify potential treatments and conduct of numerous clinical trials were performed to test new and existing therapies. Unique manufacturing capabilities and sharing available capacity to ramp up production remains evident. Collaboration is observed amongst government agencies, hospitals, doctors and others to donate supplies and medicines to help those affected around the world. Most importantly, the industry remains steadfast in their commitment to research and development of new medicines to prevent, treat and cure disease in all its forms, not just COVID-19.
Healthcare deal-making has begun a robust recovery from depressed second and third quarters of 2020
Several of the largest M&A transactions in 2020 occurred in the pharmaceutical space, where dealmaking now appears to be reapproaching pre-pandemic levels. Over the past decade, large pharmaceutical companies have scaled back their own research & development activity in favor of acquiring the makers of promising products at the clinical trials stage. The pandemic may even prove to be a temporary accelerant to pharmaceutical M&A. During the pandemic, publicly traded companies assumed large amounts of debt in an effort to add cash to their balance sheets, then looked to spend it on acquisitions as investor confidence returned.
Healthcare deal-making has begun a robust recovery from depressed second and third quarters of 2020. Transactions involving both inpatient and outpatient care facilities ticked up significantly in Q4 2020, as continuing financial pressure caused by the elective procedures delay made more practice owners amenable to acquisitions. The COVID-19 pandemic has accelerated the shift to digital health and the need for tech-enabled health services. And that’s driving robust mergers and acquisitions activity in the technology space. The accelerated implementation and adoption of healthcare apps, telemedicine, and web-based resources is driving both M&A volumes and deal values across health technology in 2020.
It appears that COVID-19 has actually confirmed the strategic rationale underlying many transactions that were already underway and may be acting as a catalyst for innovative strategic partnerships and tactical transactions. The pandemic has accelerated the need for strategic initiatives that address the opportunities of industry transformation and that reward well-thought-out alignment opportunities.
Biden, who has now had two doses of a COVID-19 vaccine, will likely be reminded over this term by the biopharma industry about how quickly this industry jumped in to save the country, the economy and the world
In addition, there were numerous discussions at the conference referencing the new administration in Washington, DC. The Democrats will control all three bodies that will shape President Joe Biden’s term in office. The Biden team admonished former President Donald Trump’s response, which did not favor masks or lockdowns and pushed for some drugs and treatments that proved of little efficacy. Biden et al. is seeking to making 100 million shots against COVID-19 available in his first 100 days, and he has assembled a team of scientists to help lead the response, intentionally putting science first. The major backing of science in general serves as a deliberate break from the Trump administration, which many in the scientific community saw as being anti-science. Biden, who has now had two doses of a COVID-19 vaccine, will likely be reminded over this term by the biopharma industry about how quickly this industry jumped in to save the country, the economy and the world. However, there are still some loud anti-pharma voices in Washington that will focus on assuring that there is no free ride for the next four years on such topics as drug pricing, the ACA or R&D tax incentives. “See you” at #JPM2022.
David H. Crean, Ph.D., is a Managing Partner for Cardiff Advisory LLC, an investment banking M&A advisory firm focused solely on transaction in the healthcare and life sciences sectors. Additional information on Cardiff Advisory is available at cardiffadvisory.com.
This article is provided for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. Securities and investment banking services are offered through BA Securities, LLC Member FINRA, SIPC. David H. Crean is a Registered Representative for BA Securities. Cardiff Advisory and BA Securities are separate and unaffiliated entities.