Everyone is eager to read the tea leaves from the JP Morgan Healthcare Conference in San Francisco and see more bulls than bears this year, after a prolonged bear market. 

M&A is a big factor in getting generalist investors back into the healthcare market after fleeing post-Covid. And we’re off to a good start, with about $20 billion in M&A deals having been announced so far this year -- though a big chunk of that was J&J’s $14.6 billion acquisition of Intra-Cellular Therapies. 

As we know, deals don’t happen overnight, so it’s possible those coming down the pike were hatching inside or on the fringes of the big annual industry event in San Francisco. In the meantime, there are questions and unknowns for the industry this year:

• Where will interest rates go?

• Will the U.S. Federal Trade Commission be more relaxed under the new administration, fueling more M&A?

• Will the U.S. Biosecure Act be resurrected and curb big pharma’s zeal for Chinese licensing deals?

• Will pharma get the pause in Inflation Reduction Act negotiations it’s asking for?

• Venture capital rounds have been large but quite selective around ‘safer’ bets (i.e. data), will they be spread more widely (and with an appetite for more risk) especially amid a dearth of IPOs?

• Will any changes at the FDA help or hinder the drug approval process?

Yet there are good reasons to be optimistic: 

• Big pharma is facing a more than $400 billion patent cliff, according to STAT, including the expiration on Merck’s blockbuster Keytruda (though it’s racing to get approval for the subcutaneous version), so companies will have to do deals to replenish their pipelines

• Chinese licensing deals, which have soared in the past 5 years, have mostly been for early-stage assets (preclinical to Phase 1)

• ‘Herding’ around hot asset classes like obesity tends to go in waves and the Street can be hot-and-cold about them, as it was with Lilly’s reduced 4Q sales guidance; therapies that answer an unmet need for patients should still be rewarded

• US money is making its way to the UK and Europe via family offices, seed investors and funds (you may even have met a few recently at local networking events)

• The UK government is looking to the private sector to help reduce NHS waiting times and improve efficiency

• While most pharma companies say they’ve incorporated AI into their drug development processes, it’s incremental and there’s room for more

Whether you’re pursuing a licensing/VC deal, M&A, IPO or dual track process, you need answers to the questions the market will ask: How are you solving an unmet need? How is your therapy or technology unique? And who’s going to pay for it?

It’s best to kick your own tires before others do, and we’re here to help.

If you would like to hear more about how we can advise your communications strategy, please get in touch: healthcare@cardewgroup.com.