Regular PharmaBoardroom contributor David H. Crean outlines the resilient and cautious optimism observed at JPM 2025, the annual healthcare financing conference held near San Francisco’s Union Square. While uncertainties and headwinds still persist, particularly around regulatory changes, affordability issues, and capital financing in the public and private markets, the healthcare and life sciences sectors appear well-positioned to navigate the complexities of the coming year, with those able to innovate, advance their technologies, derisk business models, and maintain financial discipline likely to emerge as industry leaders.

 

The 43rd Annual JP Morgan Healthcare Conference, including the numerous satellite meetings such as Biotech Showcase, RESI, and BIO, to name a few, brought together healthcare professionals, including industry leaders, investors, and CEOs/ founders, to discuss innovation, financing, company performance and guidance for the new year in the healthcare and life sciences sectors. The event, known for setting the tone for the year ahead, showcased a sense of resilience and cautious optimism among CEOs, founders, bankers, and investors, despite ongoing challenges in the sector.

Much different this year versus prior years was beefed up security at many of the events. Organizers increased security and safety measures due to recent attacks, including the fatal shooting of the CEO of UnitedHealth Group’s insurance arm in late 2024. The Westin St. Francis, for example, was augmented by officers from the city’s police force and bolstered by a maze of steel barricades, to better control entry and exit among the numerous attendees.

The past year reinforced a crucial truth in life sciences and healthcare: resilience matters more than timing. 2024 did not meet expectations for the year from the standpoint of capital financing and liquidity events. Many companies, unfortunately, were forced to pursue strategic alternatives or close their doors because of their inability to acquire requisite capital and advance their technologies. While many focused on market conditions, the real story was companies finding creative ways to extend their runway and advance innovation and breakthrough science, products, and services.

Looking ahead, some of the key trends to watch include 1) the IPO (initial public offering) window showing signs of reopening with strong candidates in the queue; 2) Mergers and Acquisition (M&A) momentum building as large strategic players seek pipeline opportunities for growth, diversification and intellectual property exclusivities; 3) recent interest rate cuts could improve capital access and reduce the cost of capital; 4) continued focus on capital efficiency and strategic partnerships; and 5) expectations that the incoming Trump administration may likely bring changes to healthcare policy and infrastructure, potentially affecting the ACA, Medicare, Medicaid, drug pricing regulations, and the FDA/Health and Human Services (HHS). Nevertheless, departing from JPM 2025, I carry with me a sense of cautious optimism and high hopes for a pro-growth, pro-business and pro-investment approach driven partly by a new administration in Washington, DC and improving economic conditions.

 

Areas on the Radar

There are several areas on the radar worth highlighting within the healthcare sector subclassifications per analysts.

Pharmaceuticals and Biotechnology

Sentiment has markedly improved with increased deal activity in 2024 and the Federal Reserve beginning much-anticipated interest rate cuts in 3Q 2024. Innovation remains robust with core product growth and new launches to offset the upcoming patent cycle and IRA-related pricing concerns. IPOs experienced strong pricing and aftermarket outcomes, rekindling enthusiasm for a broader reopening of the market. Clinical catalysts continue to drive equity offerings, including follow-ons and PIPEs post-data. There is a focus on balance sheets and runways, strategic and alternative funding options to equity. Importantly, a robust MA& environment is expected for bolt-on transactions fueled by significant dry powder firepower amongst pharma companies and large-cap biotechnology players.

MedTech

The sector is well-positioned heading into 2025, supported by strong underlying fundamentals and favorable market dynamics. Investors are likely to be paying attention to potential tariffs under the new administration and implications on gross margin and earnings per share. Large cap valuations are highly correlated to revenue growth while small to midsize cap multiples are bifurcated based on scale, consistent performance, and profitable growth. Robust M&A activity is likely relative to the last couple of years, with well capitalized strategic leaning in on larger transactions that can move the needle. Portfolio management/carve-outs will continue to be a focus as companies strategically reposition and redeploy capital. Lastly, there is a growing pipeline of IPOs with strong buy-side interest for new medtech stories, though investors are discerning and have high criteria to invest.

Life Sciences Tools, Diagnostics and Pharma Services

Long-term sector, fundamentals are intact despite recent headwinds, impacting bio-pharmaceutical funding, effects of Covid and stocking improvement. Early stage, high growth, and pre-profitable businesses continue to experience share price pressure given investor focus on profitability and cash runway. Limited equity financing activity in 2022 and 2023 has resulted in a pent-up need for both private and public funding. That will likely impact 2025. Large strategic companies and private equity have significant dry powder and are actively looking to deploy capital for best-in-class assets across the sector. Large and mid-cap consolidators focused on profitable assets with proven commercial scale and complementary technology. Key technology trends include Proteomics and drug discovery, new and advanced instrumentation, lab automation, and differentiated research and manufacturing capabilities for key growth end markets, such as biologics, GLP-1s, etc.

Healthcare Services

After multiple years without an IPO, 2024 saw a resurgence in new issuance, with seven firms tapping the public markets. Large-cap strategics have pursued a more measured approach to M&A in favor of returning capital to shareholders. Sponsors step back into the fray, announcing a variety of take privates, minority transactions, and recapitalization. Investors continue to favor models with durable growth and margins, proven unit, economics, and profitability over size growth. Lastly, 2025 looks to be a very active year across markets, particularly in M&A, although some level of caution remains around the expectation of regulatory changes under the new Trump administration in Washington.

AI and Digital Transformation

Artificial intelligence (AI) has emerged as a dominant theme, with companies focusing on practical implementation and scalable, enterprise-wide deployments that deliver measurable value. Healthcare organizations are demanding robust evidence of potential ROI before signing contracts for AI solutions. Foundation model providers are expected to launch healthcare and life sciences-specific products in 2025, with companies like OpenAI, Anthropic, Nvidia, and Google actively building specialized teams and models for healthcare applications.

M&A Activity and Deal-Making

The meeting conferences highlighted an anticipated increase in M&A for 2025. With improved economic conditions and reduced headwinds for many subsectors, a lion’s share of executives expect more deals in 2025 than in 2024. Several significant M&A and partnership deals were announced in conjunction with the conference including Johnson & Johnson acquiring Intra-Cellular Therapies for $14.6 billion, GSK acquiring IDRx for up to $1.15 billion, Eli Lilly acquiring a clinical oncology drug candidate from Scorpion Therapeutics for up to $2.5 billion in milestone payments, and Nvidia announcing new partnerships with IQVIA, Illumina, Mayo Clinic, and Arc Institute to advance AI applications in healthcare and life sciences. These deals reflect the industry’s focus on strategic acquisitions, partnerships in key therapeutic areas like oncology and inflammatory diseases, and the growing importance of AI and data analytics in healthcare.

Therapeutic Focus Areas

Several therapeutic areas garnered significant attention such as:

  1. Obesity treatments, particularly GLP-1 therapies, continue to capture interest due to their broad therapeutic potential including neurodegenerative applications beyond cardiometabolic conditions.
  2. Oncology remains one of the highest-funded therapeutic areas.
  3. Immunology and inflammation therapies are advancing.
  4. Gene therapy and editing technologies are progressing, albeit with commercialization challenges.

 

Resilience in the Face of Challenges

Despite ongoing pressures, the overall sentiment at the conference was one of resilience and cautious optimism. CEOs, founders, bankers, and investors demonstrated a readiness to adapt to changing market conditions and leverage new opportunities. Many healthcare organizations reported improved financial footing compared to the previous year. However, rising expenses continue to pressure hospital finances, underscoring the need for strategic cost management and operational efficiency.

The life sciences industry, in particular, showed strong momentum in innovation. Executives expressed confidence in the sector’s ability to drive breakthrough innovations, even in the face of economic and regulatory challenges. Companies are focusing on developing growth strategies to increase revenue while be capitally efficient. Strategies include exploring new business models, strategic partnerships, and investment in emerging technologies. The healthcare private equity (PE) market demonstrated resilience, with dealmaking reaching the second-highest year on record in 2024. This trend is expected to continue into 2025, reflecting investor confidence in the sector’s long-term prospects.

The integration of AI, digital health solutions, and other advanced technologies is seen as a key driver of resilience and growth. Companies are leveraging these tools to improve operational efficiency, enhance patient care, and drive innovation in drug discovery and development.

 

Final Thoughts

The 2025 JP Morgan Healthcare Conference week painted a picture of an industry at a critical juncture. While challenges persist, particularly around affordability, regulatory uncertainty, and workforce issues, there’s a palpable sense of resilience and determination among industry leaders. The focus on innovation, strategic growth, and leveraging cutting-edge technologies like AI suggests that the healthcare and life sciences sectors are well-positioned to navigate the complexities of the coming year and beyond.

The biotech/life sciences sector remains resilient despite continued headwinds. As we enter 2025, quality assets will find funding, strategic buyers will remain active, and innovation will continue advancing healthcare solutions. The key will be maintaining runway while executing on clear value-creation milestones.

As we prepare for the year ahead, let’s carry forward the lessons learned: the value of persistence, the power of adaptability, and the strength of community. Here’s to building on this foundation and striving for even greater heights in the coming year! To the entrepreneurs working to transform healthcare: stay focused, be capital efficient, and remember – sometimes just surviving is winning.

 

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Disclosure

David H. Crean, Ph.D., is a General Partner of 1004 Venture Partners and a Managing Partner for Cardiff Advisory LLC, an M&A investment banking strategic advisory firm focused on the Life Sciences and Healthcare sectors. 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.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.