Perspectives from J.P. Morgan’s 2019 Health Care Investor Conference


Our contributor at large, David Crean, Managing Director for Objective Capital Partners, attended J.P. Morgan’s 2019 Health Care Investor Conference, one of the biggest events in the life sciences calendar and a fantastic indicator of what is to come in healthcare for the year ahead.

Here, Crean gives us the inside scoop. 

The heart of JPM is the need for each public company at the event to establish guidelines for what they seek to achieve during 2019 and beyond.


Well, it’s another year in the books for the annual pilgrimage to the Bay Area’s Healthcare Conference in Union Square called JPMorgan (JPM). By way of reference to this meeting, I also include the numerous ancillary biotech, medical device and digital healthcare meetings in and around Union Square and the plethora of healthcare folks that converge into the 6-block radius around the main event at the Westin St. Francis Hotel. Besides serving as a platform for a large number of public company presentations, it has also morphed into a hyper-networking event, connecting CEO’s, CFO’s, and entrepreneurs with commercial and investment bankers, law firms and the rest of the investment community. The sheer number of social events on one’s calendar can be overwhelming if not taken in moderation.


Despite the frenetic and rainy week in San Francisco, FOMO still has real value.  The risk of being left behind is a powerful motivator to endure the chaos. I have been attending JPM, previously called H&Q or what I collectively refer to as the “circus”, for more than 20 years and it still occupies a powerful function in this writer’s mind for closing the books on the prior year and laying out the expectations and tone for the life science industry going into the new year.  


There are certainly the positive aspects about JPM, and they must be balanced against the challenges and negativities that this conference has attracted over the years such as cursory and superficial meetings at best, excessive costs for hotels, restaurants and temporary meeting spots, ride-share surge pricing and the dichotomy of expensive business suits stepping over or around the growing number of homeless people in the city of San Francisco. Certain other influencers have offered their opinions and feel differently than I about the value in attending future JPM’s. They have authored reflective articles bemoaning the conference’s value and a negative stream of “excesses”.  They raise valid points. Nonetheless, I will miss these colleagues at #JPM2020 and with the right expectations and attitude and gradual recalibration, disappointment can be minimized, and significant value can still be realized.


Inside the meeting itself, the industry’s problems haven’t disappeared, and may even redouble in 2019 as a new Democratic House of Representatives seeks to up scrutiny on drug price increases.


Objectives of JPM

There are several objectives for JPM to keep in mind if you have never experienced the event or are an infrequent visitor. The core purpose is public biopharma company guidance. The heart of JPM is the need for each public company at the event to establish guidelines for what they seek to achieve during 2019 and beyond. The quality and quantity of influential investors at JPM allows large pharma, and smaller public biotechs, to reach a wide audience in person on a single trip. This is why the event exists and is highly respected.


Secondly, JPM “gets the buzz going” for the new year. JPM tends to ignite industry momentum each year. The intentional release of good news by many companies prior to or at JPM creates a trampoline effect that likely drives investment and risk capital cycles through the rest of the year.  


Lastly, many biotech companies have been launched, financed, bought and partnered during this week without holding an actual invite to the main JPM event itself. I call this “hanging out by the hoop”.  A bystander effect is created because every major pharma hosts meetings outside of the core meeting, providing a target rich environment for emerging companies to pitch and sell their technology. This is worth the weight of gold for every emerging life science company that wants to contemplate a partnership or investment to further their business. You can witness this first hand by hanging out in the lobbies of the Hilton Union Square and Par55, where the Biotech, Medtech and Digital HealthcareShowcases are held each year.


Themes Emanating out of JPM

The distributed nature of JPM makes it hard to pull out one overarching theme, but a few trends and topics of discussion stood out above the rest including dealmaking, drug pricing, PDUFA (Prescription Drug User Fee Act) implications due to Washington Shutdown, patient engagement, and more.


Deal Activity and Investment Funding

JPM usually takes on one of many tones. This year’s meeting was somewhere between gloom and sunshine, perhaps cautiously optimistic. On the whole, things seem reasonably positive, albeit it’s quite a complex global backdrop that the sector is operating in and with pretty nervous markets. The meeting proved to be a soothing ointment for biotech’s recent woes. Fueled by two major buyouts, shares in most drugmakers rose over the course of the four-day meeting, reversing a stock slide that weighed down the sector in the waning months of 2018. We witnessed the big announcements, such as the merger and acquisition deals of BMS-Celgene and Lilly-Loxo, an immuno-oncology deal that appeared to be rushed and put together swiftly in a short period of time in order for it to be announced at the start of JPM.  These type of announcements have become standard practice before and during the meeting. With nearly $90 billion transacted in cancer biotech deals over the past two months, investors appear to be hoping more buyers remain. Pricing pressures, patent expiries and pipeline failures are threatening the bottom lines of many big drugmakers. Couple that with the recent stock de-valuation across the biotech sector, and there’s reason to believe small companies with at least somewhat promising later-stage assets could see interest from a buyer.


The sector also celebrated the flood of capital – overall VC funding is back to its dot-com era scale. We heard a lot about financials – market sizes, revenues, M&A synergies, and deal values. All of these are real and important questions in the grand scheme of running a company, analyzing a stock, or financing a sector. Prospects for further dealmaking and financings, coupled with clinical progress in oncology and other key areas, could help keep momentum riding high.


Drug Pricing

Inside the meeting itself, the industry’s problems haven’t disappeared, and may even redouble in 2019 as a new Democratic House of Representatives seeks to up scrutiny on drug price increases. Johnson & Johnson (J&J) CEO Alex Gorsky told conference goers that if the industry doesn’t begin policing itself, it risks potentially more onerous alternatives. Ironically, dozens of pharma companies hiked their drug prices at the top of the year. January 1 brought price increases on dozens of drugs marketed by major pharmaceutical firms, including Allergan, Biogen, Bristol-Myers Squibb, Eli Lilly and J&J. Health and Human Services (HHS) Secretary Alex Azar isn’t buying that argument. “For those listening in the pharmaceutical industry: The list price increases must stop,” Azar tweeted, as industry executives remained gathered in the halls of the Westin St. Francis.


PDUFA Implications

A partial government shutdown added a new wrinkle to the conference messaging from certain companies as well, impacting the Food and Drug Administration’s (FDA) ability to review new drugs. Successfully bringing a drug to market requires management of a long list of potential risks, all of which could derail an experimental therapy in its journey to regulators’ desks. In recent weeks, biotechs have had a new risk to contend with and another line item to be added in the development Gantt chart, as a partial shutdown of the federal government has limited the activities the FDA can carry out. Since the shutdown began prior to the Christmas holiday, the agency has been unable to accept user fees associated with applications for approval of new drugs. FDA chief Scott Gottlieb has also indicated the FDA would reallocate some user fee monies for pre-market review work to post-market surveillance.


Bullish Forecasts and Innovation

Large pharma came storming out of the gate at this year’s Conference offering bullish forecasts. Merck chief Ken Frazier predicted that Keytruda will just keep on growing, for instance, while Novartis CEO Vas Narasimhan argued that the company’s cell and gene therapy work now will pay off big-time in the long run, even if the numbers don’t look so great right now. J&J’s CFO defended against talc allegations in a bombshell Reuters article. Regeneron touted better-than-expected Eylea growth for ocular disorders and blasted doubts about its late-to-market checkpoint inhibitor Libtayo.  JPM also showcased an industry hard at work calmly and meaningfully trying to address and innovate to solve the industry’s structural, systemic and demographic challenges.



Pharma CEO’s such as Paul Hudson were meeting with far more tech companies offering artificial intelligence (AI) and digital health platforms this year than in years past regarding potential partnerships. At JPM2019, it appeared to be about 50% health-tech. Will 2019 will be the “beginning of the tech disruption” for pharma? The industry appears ready to innovate with artificial intelligence and machine learning, as incumbent technology providers develop new products and strategy and disruption is expected from new market entrants. Increasingly, the startups that are thriving and surviving in digital health are ones that are expanding their missions and positioning themselves not as technology companies, but as problem solving companies that utilize technology in ways that make sense.


Knowing your customer and their preferences is one of the first steps in making sure that you can provide a satisfactory customer experience.


Oncology and Rare Disorders

Oncology and rare disorders are still centre stage for partnerships, investment and R&D focus.  Cancer is a big market, and getting bigger as we have longer lifespans and more seniors. The disease was very much framed as a significant opportunity. There has been a good deal of activity in the oncology space recently, including the recent launch of One Oncology by private equity fund General Atlantic, several leading oncology medical groups and oncology EMR provider Flatiron Health. GSK CEO Emma Walmsley put oncology back on the front burner last year, and now she’s touting the company’s progress since. Obviously, the $5 billion Tesaro buyout, announced last month, added a boost. GSK’s oncology pipeline is “gaining strength and will start to impact their revenue growth outlook from next year.  Alexion is looking to pivot this year from an ultrarare-disease company to a rare-disease company. Alexion is about a story of innovation and volume. “It is not going to be a story about price and price increases,” CEO Ludwig Hantson said.


Pharmacy Benefit Management

Northwell announced that they were launching their own pharmacy benefit management (PBM) operation. Expect to see a lot of realignment and new entries in the PBM space, given the recent mergers and other activity (CVS Health/Aetna, Cigna/ESI, Anthem/IngenioRx). Much of the PBM space is being rethought now as its scope can expand to chronic condition management (an objective highlighted by Cigna) or to medical benefits management as ESI is hoping with its recent acquisition of eviCore.


There was little question that the industry is continuing to move toward value-based and risk-based reimbursement – the challenge now is building or buying the necessary infrastructure, educating stakeholders and obtaining commitment and engagement, and structuring appropriate partnerships and relationships with other industry participants.


The New Front Door for Patients

Larry Merlo of CVS characterized in his presentation the CVS/Aetna combined entity as providing a “new front door” to healthcare. And he sees that new front door as key to transforming the consumer experience in healthcare and focusing on consumers. CVS’ three guiding principles were: (1) Be Local – using the large number of CVS stores through which 1 of 3 Americans engage with CVS; (2) Make it Simple – work to explain and guide consumers, in part by using trusted pharmacists to interact with consumers; and (3) Improve Health, with strategies aimed enterprise wide to improve quality and reduce cost through common chronic disease management, readmission prevention, site of care management, optimizing primary care and complex chronic disease management. One of the newest ideas announced by CVS were its “concept stores” that will be organized in a “hub and spoke” approach with existing CVS stores. CVS clearly wants to be the consumers’ partner in their health relationships and to help consumers navigate the healthcare system.


There was little question that the industry is continuing to move toward value-based and risk-based reimbursement – the challenge now is building or buying the necessary infrastructure, educating stakeholders and obtaining commitment and engagement, and structuring appropriate partnerships and relationships with other industry participants.


Hospital Services at Home

Another trend noted at the conference multiple times was the growth of hospital services being provided at home. Intermountain talked about their use of the “virtual hospital” to serve a geographic footprint the size of Italy with a thin population density and shared that now 40 services were being delivered through their virtual hospital model. There has also been the use of a hospital at home model in dense population areas, such as New York City. For hospitals that have full bed utilization (such as tertiary or quaternary academic medical centres), virtual hospital services can offer the opportunity potentially for further revenue and ADC expansion without the full per bed infrastructure build cost of the current physical facilities, especially for less complex admissions. More to come next year, no doubt.


Provider Strategy Change

For healthcare providers, there is a major shift taking place. They are moving from a traditional strategy of buying and building hospitals and simply providing care into a new and more dynamic strategy that focuses on leveraging the platform they have in place to create more value and growth via new and often more profitable streams of revenue. The healthcare delivery systems of today will increasingly leverage the platform and resources that they have in place to become a hub for both health and healthcare in the future. There is a level of urgency to move quickly. Many feel that if they don’t expand the role that they play in both health and healthcare in their community, someone else will step in.

Many provider organizations are moving aggressively to create digital front doors. Kaiser Permanente delivered 77 million virtual visits last year. Intermountain introduced a virtual hospital that provides over 40 services and has delivered over 500,000 interactions. Nearly every health system leverages MyChart or a similar personal health record platform. There is an enormous amount of risk for hospitals and health systems that don’t take action here, as traditional healthcare providers will be competing with more mainstream and polished consumer brands for the relationships and trust of the folks in their community.


Patient Engagement

Definitely one of the buzz phrases this year, as in “we have to have better and more patient engagement in order to achieve corporate objectives.”  Numerous companies displayed or spoke of their developed apps to solve patient engagement gaps. “We need to know the customer the way Amazon does,” stated Livongo CEO. Knowing your customer and their preferences is one of the first steps in making sure that you can provide a satisfactory customer experience.  More to follow on this important topic throughout 2019.

See you at JPM 2020!



David H. Crean, Ph.D., is a Managing Director for Objective Capital Partners, a leading investment banking advisory firm whose Principals have collectively engaged in more than 500 successful transactions serving the transaction needs of growth stage and mid-size companies. Services include M&A sale transactions, partnering/ licensing, equity and debt capital raises, valuation and comprehensive advisory services. Additional information on Objective Capital Partners is available at

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. Objective Capital Partners and BA Securities are separate and unaffiliated entities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC makes no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person.

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