Key Takeaways from J.P. Morgan’s 41st Annual Healthcare Conference​

J.P. Morgan’s Annual Healthcare Conference is the industry’s largest, most informative healthcare investment symposium. Attracting industry leaders, emerging fast-growth companies, and technology creators from around the world, life science corporations share their latest advances, leading research, and best practices—as well as their intentions to scale their digital health solutions—to the masses in hopes of securing capital.

This year, the Conference covered developments ranging from digital health and the integration of artificial intelligence (AI) to deep learning, gene editing, bioengineering, implantable technology, medical funding, personalized care, service automation, and much more. Needless to say, there were thousands of invaluable talking points made and thought-provoking insights shared over the course of the four-day event. 

Using the AlphaSense platform, we reviewed the assortment of transcripts emanating from the Conference to decipher what trends and developments are setting the stage for healthcare in 2023 and beyond. 

Declining M&A Activity 

By leveraging AlphaSense’s Smart Synonyms™ technology across our vast universe of content, we found that 185 of the Conference’s transcripts discussed mergers and acquisitions within the healthcare industry. 

Coined the “M&A Winter,” presenters mentioned that in 2022, the volume of deals was meager and that by this past January, deal volume was the worst it has been in 20 years. Only 66 deals were made in the first few weeks of the new year—a stark contrast to the 247 made during the same period last year. 

According to the Financial Times, the overall deal value is down 27% to $4.9bn. Specifically, within the pharma and biotech sectors, there have been 22 deals announced so far in 2023—again, a low number compared to the 70 made over the same period last year. Notably, the overall value rose from $2.6bn to $4.4bn, which could be attributed to inflation. 

Corporations that presented at the Conference echoed similar sentiments within the event’s transcripts:

“So the way we look at business development, and that has not changed over the year in terms of our overall strategies. We’re not looking for a very large merger or acquisition to replace revenue. We don’t have that problem, and so we don’t have that need.”

– Anat Ashkenazi, Senior VP and CFO of Eli Lily & Co.

“But I don’t think that when we talk about our long-term growth plan, I don’t feel that we need to do M&A to be able to get there. I think we’ve got a lot of organic opportunity. So then that just puts us in an opportunity to be a little bit more opportunistic in terms of seeing these opportunities that come our way, so.”

– Robert B. Ford, Chairman of the Board, President, and CEO of Abbott Laboratories

Royalty Deals Will Soar

Over the next decade, academic nonprofits are forecasted to invest more than $1 trillion in life sciences research and development (R&D). These nonprofit institutions seek to license their inventions or IP and establish existing royalties. Additionally, unprofitable biopharma, aka most biotech companies, is expected to invest $1.1 trillion on selling, general, and administrative expenses (SG&A) and R&D over the next ten years. 

“The industry is going to need $4 trillion dollars for R&D and SG&A spending over the next ten years; about a billion of that is estimated to be from biotechs or non-profitable pharma.”

– Nick Mazing, Director of Research at AlphaSense and Host of AlphaSense podcast, “Signals”

A royalty deal to note is the one between Ionis and Royal Pharma. Ionis fronted $500 million in funding and up to $625 million in milestones for royalties on Biogen’s Spinraza for Spiral Muscular Atrophy (SMA). In 2021, Spinraza sales reached $1.9 billion in 2021, and Royalty Pharma acquired 25% of Ionis’ royalty before 2028 and 45% beginning in 2028.

Royalty Pharma also acquired 25% of Ionis’s royalty for Pelacarsen (the royalty ranging from the mid-teens to low-20% royalty), resulting in a mid-single digit royalty. Phase 2 studies of the drug showed results of patients experiencing a 75% to 80% reduction in lipoprotein (A). Phase 3 study results are slated for 2025.

MedTech Set for Prosperity 

Transcripts showed that corporate creators and innovators of MedTech, or technology implemented in medical processes ranging from surgery to administrative work, are positioned for growth this year. 

Dexcom (DXCM), the pioneer and leader in real-time continuous glucose monitoring, is taking advantage of the growing market for basal insulin, a slow-acting type of insulin. DXCM continues to focus on their commercial-use diabetes management tool CGM (continuous glucose monitoring) in 2023, with the global rollout of G7​–the latest rendition of CGM. 

The company is leaning on clinical evidence from its landmark MOBILE study to increase reimbursement and is guiding for revenue growth of +15-20%—a conservative fraction, according to most analysts. 

Caption: Above, a chart illustrating DXCM’s TAM expansion driven by basal-only population in 2H23

Inspire Medical Systems (INSP), the innovator of an alternative to CPAP that works inside your body while you sleep, is also expected to see growth this fiscal year. INSP has honed in on compacting treatment for sleep apnea with a small device that is surgically placed during a same-day, outpatient procedure.

Inspire’s Investments in its ​DTC campaign continue to be the cornerstone for its growth strategy (Q4 of 2022 had an expected quarterly revenue range of $137.5 million-plus and saw a 76% YoY growth rate) to drive awareness and growth in Inspire procedures. The looming approval for INSP to operate on pediatric patients with down syndrome is expected to drive further QoQ growth in 2023. 

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Want to dig even deeper into the top takeaways from J.P. Morgan’s 41st Annual Healthcare Conference​? Access our webinar to hear more on the trends, deals, and drug developments shaping the future of the healthcare industry.