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A Fresh Take

Insights on M&A, litigation, and corporate governance in the US.

| 4 minutes read

2023 J.P. Morgan Healthcare Conference Highlights

The 41st Annual J.P. Morgan Healthcare Conference, held in-person for the first time in three years, was a tale of two cities – marked by, on the one hand, unprecedented downpour in the region and industry-wide concerns with respect to both drug pricing reform and lack of biotech investment in the prior year, and on the other, excitement regarding imminent product launches and the swift pace of research and innovation. Our Freshfields Life Sciences Transactions team attended and engaged with numerous clients and other industry players in discussions on the current state of the industry and in particular the transactional outlook. Based on those conversations, we observed the following themes.

Subdued Uptick in Biopharma M&A

Industry executives in attendance at the J.P. Morgan Healthcare Conference predicted macroeconomic and industry factors would continue to pose challenges to biotech financing—which suggests that pre-commercial biotechs will need to continue to adapt to the unfavorable environment. We have already seen numerous companies conduct significant layoffs and deprioritize pipeline products to preserve cash, and we would expect a slow but steady increase in strategic transactions as buyers and sellers find ways to bridge value gaps. For example, within hours of the start of the conference, three companies had announced acquisitions worth approximately $4.5 billion in total upfront consideration—Chiesi Farmaceutici’s proposed $1.25 billion buyout of Amryt and its portfolio of rare disease medicines; AstraZeneca’s plans to acquire Cincor Pharma and its lead candidate, Baxdrostat, for $1.3 billion; and Ipsen’s offer to acquire Albireo and its approved drug Bylvay for $952 million. Notably, all three deals included contingent value rights (CVRs) under which the target’s shareholders would be paid a milestone payment based on future performance of its lead product. While the upfront purchase price for each of the three deals represented a significant premium over the target’s pre-announcement closing price, they were still south of the previous 52-week highs. We expect to continue to see transactions executed with both parties compromising on price but with additional value payable if the target’s products perform well.  We also expect to see more licensing deals and product sales which, while not an exit for investors, provide cash in this difficult financing environment.


And yet, while the number of early-stage biotech companies in need of additional funds increased dramatically in 2022, financing, whether in the public or private markets, continues to be a challenge. Based on our discussions, only companies with late-stage assets in attractive therapeutic areas were garnering significant interest from new investors. Venture capital funds, despite having raised significant funds in recent years, remain cautious and focused on shoring up existing portfolio companies. The IPO market remains closed, and few were predicting a renaissance before Q2 2023 at the earliest. One positive for the market has been private equity’s increased investment in life sciences, which we expect to continue this year. On this front, Blackstone has been leading the way, having made ten investments out of a $4.6 billion life sciences fund launched in 2020.

Future Investment and Strategy 

Between blockbuster products going off-patent, and new pricing pressures introduced by (among other things) the Inflation Reduction Act, “diversification of portfolios” was a common refrain at the conference this year. Many executives expressed high levels of interest in bolt-on M&A and strategic in-licensing transactions—particularly in biologics—with executives showing more mixed levels of interest for big ticket M&A transactions and small molecule transactions.

Many pharma companies are continuing to focus their efforts on immunology, oncology, neurology, cardiovascular and respiratory disease areas, with particular attention on immunology. We anticipate continued prioritization of these therapeutic areas which may lead to divestment of assets for other indications.

One trend is big pharma’s continued investment in vaccine research. In pre-pandemic years, companies tended towards deprioritizing vaccine work due to what was perceived as limited commercial opportunity. However, with the rapid success of vaccines coming out of the COVID-19 pandemic, many biotechs and pharma companies now seem to be prioritizing vaccine research, with multiple companies announcing that they are working specifically on RSV vaccines. It remains to be seen which companies remain committed to vaccines in “non-emergency” times.

MedTech Developments

Improving access to care and health equity was another topic that came up in many conversations around the conference. Diagnostic developers are focusing on increasing the accessibility of user-friendly diagnostic tools, particularly following the widespread roll out during the COVID-19 pandemic of over-the-counter nasal swabs. Freenome, Babson Diagnostics and Immunexpress were among the companies that discussed their plans to increase the accessibility and simplicity of a wide range of blood tests. Many other companies also touched on this topic, noting that they are focusing on “democratiz[ing] healthcare” by reducing the costs of imaging technologies and improving access in patient communities.

A number of companies in attendance at the J.P. Morgan Healthcare Conference emphasized their use of artificial intelligence in the life sciences sector. AI-use in drug discovery continues to power ahead—as one example, AI drug designer Schrödinger announced three new drug discovery programs, including an expansion of its existing partnership with Bristol Myers Squibb and a collaboration with Otsuka Pharmaceutical Co. Ltd. Another emerging trend was the applicability of AI in diagnostics; highlighted this with their diagnostic tools that use AI to flag specific health conditions by analyzing digital scans. Several other companies noted their optimism for use of AI in genetic analysis—including Nvidia, which announced its development of AI-language models that read genetic data, and BioNTech, which seems to be using AI to develop personalized treatments.

2023 is slated to be a year of reserved anticipation -- characterized by reservation in part due to shifting macroeconomic and regulatory conditions, but also filled with anticipation for increased access to care and positive “turn the tide” developments. At Freshfields, we continue to track the industry-wide developments that kicked off at the J.P. Morgan Healthcare Conference, and our team looks forward to supporting the life sciences sector as it brings innovative therapeutics, vaccines, diagnostics and MedTech products to market.