JP Morganâ€™s Healthcare Conference has always been about financing, but money has never been the main focus like it is at this yearâ€™s annual gathering in San Francisco. The hallmark of this investment meeting has been innovation, with companies passionately pitching their new product or technology and management teamâ€™s capability to execute on a business model and plan. Talk of breakthroughs and innovation was still present, but more so at the private company sessions and, especially, at those in molecular diagnostics, medical devices and regenerative medicine.
The global economic crisis and its impact on the healthcare industry clearly became the central theme beginning with the opening remarks Monday morning when Doug Braunstein, Head of Investment Banking at JP Morgan, claimed there has never been a time when â€œcredit, liquidity, and capitalâ€ were so central to every healthcare companyâ€™s strategy. This focus permeated presentations of companies and keynote luncheon speakers. Company presentations I attended included some mention or clarification about the companyâ€™s cash balance, cash flow, cash management, operational efficiencies, etc. up front and centerâ€”across big pharma, big biotech, specialty, and generic companies.
Art Levinson, GENE CEO, had a slightly different message slantâ€”assuring listeners that innovation wasnâ€™t dead at his company by listing their 26 NMEs in clinical development. He amused all when he took several minutes at the beginning of his talk to demonstrate how JP Morganâ€™s conference logo incorrectly represented the right-handed DNA helix as left-handed, a fact he thought a bank with involvement in such a highly capitalized sector should correct. He commented that if he talked about pursuing biogenerics as a strategy he would expect his board to fire him. Was this remark directed at Merck, Roche or both? Both companies have recently mentioned their prowess to pursue that business opportunity with Merck CEO Richard T. Clark making a strong point on Tuesday that they would be pursuing new revenue growth opportunities in â€œfollow on biologics.”
A day earlier, Roche CFO Erich Hunziker spoke about its management of cash which he noted was critical to managing the business. He also wanted to make it clear that Roche wasnâ€™t making short-sighted cost cuts and, thereby, sacrificing long-term perspective. He spoke of enhancing innovation and â€œoperational efficiencyâ€ in the planned merger of Roche and Genentech operations. Hunziker answered an unspoken questionâ€”that Roche did not intend to kill innovation at Genentech with their planned buyout of the remaining 44 percent that they donâ€™t already own. His tone of voice suggested he really meant it but many just donâ€™t believe Roche can control their management style from destroying the GENE culture that nurtures their innovation. Many believe the â€œbiomarkerâ€ for implementation of that intent or not will be whether Art Levinson and his team leaves or stays.
It was clear that there will be major changes in the healthcare system in the US with reinforcement of how that might take form by the keynote speakers Uwe Reinhardt, professor of health economics at Princeton University on Tuesday and Ted Kennedy, Jr., Marwood Group, on Wednesday. Reinhardt thought that a universal healthcare plan could be sold on its stimulus potential alone, and Kennedy assured the audience that â€œout the gateâ€ the new administration would deliver the expansion of SCHIP, a Medicaid bailout for the states and a major investment in Health IT. Kennedy declared there was a â€œplanetary alignmentâ€ on a health plan as result of the appointment of former Sen. Tom Daschle (D-SD) to head Health and Human Services and the new White House Office of Health Reform and the state of the economy. This coming together might finally result in a single comprehensive universal coverage bill in the US.
Kennedy further delineated the industry sectors most likely to feel pricing pressure and included all branded pharma and biotech drugs. He predicted new policy initiatives would drive growth for generic pharma and pathway for biogenerics as well.
There were 337 healthcare companies presenting starting Monday and running through Thursday, Jan. 12â€“15. These include 276 public and 61 private companies making their â€œpitchesâ€ to 1,427 public and 1,124 private equity and venture capital investors, respectively. Registration of attendees was sharply constrained by JP Morgan to a total of about 3,500 altogether versus 6,000 in the past. Many who couldnâ€™t gain admittance to the upper floors where the formal presentations and breakout sessions occur filled the St. Francis hotel lobby below. They made appointments with attendees for meetings in the lobby and other venues around Union Square or waited near the elevators and stairs to introduce themselves to attendees exiting the meeting.