Flash-flood warnings, lingering Covid fears, stock-market turbulence: JPMorgan’s big health-care conference in San Francisco has returned without nearly the opulence or excesses of the years before the pandemic.
(Bloomberg) — Flash-flood warnings, lingering Covid fears, stock-market turbulence: JPMorgan’s big health-care conference in San Francisco has returned without nearly the opulence or excesses of the years before the pandemic.
Parties have been canceled. It’s not impossible to find meeting spaces or restaurant reservations. At the confab’s base at the Westin St. Francis, what’s usually a “zoo” is this year pretty tame, said Bob White, an executive vice president at Medtronic Plc who runs the medical surgical portfolio.
“This isn’t chaotic at all,” said White, who’s been to the conference about a dozen times. “The energy is really good, but it’s even less intense than the previous years have been. Getting through those hallways in years past was much more chaotic than it was this week.”
The JPMorgan Healthcare Conference isn’t your average industry get-together. It’s where the heads of the world’s biggest drug companies publicly share their strategies with thousands of investors while privately brokering multibillion-dollar deals on the sidelines. Attendees swarm downtown San Francisco each January, with hotels near and not-so-near the Westin jacking up rates to $1,000-a-night or more, leading to inevitable complaints from attendees about the crowds and accommodations in a notoriously pricey city.
In-Person Return
This week marks the return of the in-person event for the first time in three years, and JPMorgan restricted attendance to 8,000, down from the typical 10,000. It’s resuming against the backdrop of a dismal year for biotech stocks and a lack of dealmaking as debt markets churn. Some private-equity firms opted not to send any representatives, viewing the conference as a potential waste of time given the lack of imminent business opportunities.
“We’re hearing that people want to be present but at a smaller scale,” said Subin Baral, who leads accounting and consulting firm EY’s global life sciences deals group.
EY decided not to host its annual “Circus before the Circus” cocktail party that traditionally took place the Sunday before the conference after it heard that several global companies were sending fewer representatives than in previous years, according to Baral. Lazard Ltd. also canceled a planned cocktail event Monday night.
Some attendees shortened their trips, flying in for presentations and departing, a contrast to previous years when people would stay several days. One boutique investment banker who normally attends for the whole week has found he has better interactions with CEOs over Zoom, and only set up four face-to-face meetings. Because hotel rooms have gotten so expensive, he decided not to book one and instead flew in and out in one day.
In the past, hotels sometimes charged hundreds of dollars or more for the use of their lobby tables for those who couldn’t find meeting space elsewhere. This year, it was surprisingly easy to find a seat in the lounge at the Four Seasons on Tuesday morning. Over at the St. Regis, there were several open tables in the restaurant at lunchtime.
Some gatherings weren’t scrapped altogether, but rather toned down. Canaan, a venture capital firm, normally hosts a dinner for women investors in life sciences. This year, the group opted to do it as a grab-and-go breakfast networking event instead. The Covid cancellations in recent years made it difficult to commit to organizing a dinner, which require substantial planning and financial outlays in advance.
No Fireworks
For an industry known for churning out miracle drugs and multibillion-dollar mergers, there haven’t been many fireworks at this year’s conference. Normally the biggest mergers are announced on Sunday or even early Monday before the event starts, to give executives a chance to discuss their acquisitions with the investors they meet here. A deal could still be announced this week, but it’s unlikely.
This year, the biggest deal was AstraZeneca’s $1.8 billion purchase of CinCor, the maker of a promising hypertension drug. UK-based Astra’s last large deal was its $39 billion takeover of Alexion in 2021.
It’s not that there aren’t companies for sale these days. The biotech industry has had a tough year, leaving plenty of companies vulnerable to takeover. The SPDR S&P Biotech ETF lost 26% in 2022 and the Nasdaq Biotechnology Index fell by 11%.
On the other hand, large drugmakers can definitely afford deals. Pfizer Inc. and Moderna Inc., for example have amassed huge cash piles from sales of their messenger RNA Covid vaccines. Dealmakers say big companies are acting conservatively and are showing a preference toward buying safer, later-stage biotechs with products that could help replace revenue as blockbuster drugs go off patent later this decade.
Instead of M&A, large pharma companies were talking mostly about the Inflation Reduction Act, which will give the US government the ability to cut the prices of some drugs starting in a few years. Companies are trying to work out how the rules will alter their research and development priorities, given blockbuster pills will have shorter periods of pricing power when compared with infused drugs.
Wild Weather
If anything, the most popular conversation topic was the weather. Attendees spent part of the day Tuesday trying to escape torrential downpour in the city. Meetings were interrupted by an emergency alarm on people’s phones warning of flash flooding. A thunderstorm brought a tree down on top of a bus a few blocks from the conference. Those trying to make it from one meeting to the next huddled under awnings or rushed into hotel lobbies.
The weather only added further fuel to the perennial jokes about whether the conference should be held somewhere besides San Francisco, which has struggled to lure back workers and tourists following the pandemic. Much of the industry is based in Boston or New Jersey, necessitating cross-country flights at a time of year when weather normally presents obstacles on the east coast.
As for whether the bank would actually move the conference in response to everyone’s gripes, Mike Gaito, JPMorgan’s global head of health-care investment banking, said “we’re committed to San Francisco and the Westin St. Francis — where the conference has always been — for at least the near term,” without being more specific on the time frame.
To David Blais, senior managing director at Guggenheim Securities’s health-care investment banking group, this year’s event could be an important gauge of a return to normalcy.
“JPMorgan used to be a conference that not a single person missed,” he said before the event. “I think this is a really important year for the conference, and it’ll be interesting to see if it’s an inflection point.”
–With assistance from Angelica Peebles and Robert Langreth.
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