Guest blog by Audrey S. Erbes, Principal, Erbes & Associates
While last year’s meeting was dominated by the global economic crisis and its impact on the healthcare industry, this year’s presenters tried to give investors a glimmer of hope for better outcomes in the future. The fear that darkened moods of attendees in 2009 was gone but there was figuratively no bright sunshine inside the Westin St. Francis Hotel (or literally outside, under the cloudy and rainy skies of San Francisco). No one seemed ready to embrace full blown optimism as yet.
Big Pharma companies touted improved pipelines with more focused and productive R&D and licensing-in of innovative compounds when needed to build confidence with investors. Many gave assurances of the replacement of already lost or impending lost revenues as a result of the blockbuster “patent cliff” between 2008 and 2014. They offered more streamlined organizations, new business models, expansion into emerging markets with promising growth in branded, off patent drugs as well as innovative drugs, and, for some, the growth of their share of the expanding worldwide vaccine market. A few that already had existing lower-margin ancillary businesses, e.g., OTC or animal health, on the ground in emerging markets touted their related investments and increases in revenue. Notably, Martin Mackay, president of global R&D, Pfizer and Elliott Sigal, chief scientific officer and president of R&D, BMS presented rather than their company CEOs.
Some specialty companies had very positive news with respect to revenues and products. An outstanding example was TEVA announcing the achievement of a 16.4 percent share of U.S. Rx’s and number one status while fifth place Pfizer has only 5.6 percent. They shared news of growth of their branded neurological products, e.g., Coxapone (glatiramer acetate) for multiple sclerosis and Azilect (rasagiline) for Parkinson’s and the anticipated maintenance of the split in their business—70 percent generic, 30 percent brand—continuing into 2015.
David Hung, president and CEO of Medivation, bragged about the cost efficiency of their business model in achieving the Phase III status for Dimebon (latrepirdine) for Alzheimer’s disease within less than 6 years for an investment of only $175 million dollars. He presented an intriguing explanation of the mechanism of action of Dimebon in enhancing mitochondrial function, neuronal survival and neuronal sprouting—all supportive of the positive efficacy data reported for the drug in AD so far. The drug is in Phase III development and partnered with Pfizer.
Big Biotech’s Amgen CEO Kevin Sharer, chairman, CEO and President, was reassuring in giving the reasons he thought “we have a lot to feel good about in 2009”—they streamlined operating expenses, held up well against biosimilars in Europe, advanced their Phase II pipeline and have stable base of business. He shared they were closer to global approvals for Prolia (denosumab) in postmenopausal osteoporosis with the sales team in place. He noted they had 30,000 applicants for the 500 new sales slots for the product.
Doug Braunstein, head of investment banking at JP Morgan in his opening remarks to the conference Monday morning claimed signs of the beginning of a “turn in the economy.” Along with an update of several market indicators, he announced that “the IPO market returned in mid-2009” and provided further encouragement with fact that 50 IPO filings are lined up for 2010.
Later that day, the keynote luncheon speaker, Jamie Dimon, chairman and CEO, JP Morgan Chase & Company focused his remarks on the “extraordinary times” we are facing and the impending reform of financial regulations and health care. He provided his analysis of what went wrong and what needed correction—emphasizing the need for “better regulation”… but “not just more”—as he listed the events of the financial crisis. He voiced support for a more efficient health care system and expects a bill will be passed.
Tuesday’s luncheon keynote speaker Tom Scully, former administrator of the Center for Medicare and Medicaid Services under George W. Bush and general partner, Welsh Carson Anderson and Stowe, expanded on Dimon’s initial health care reform remarks by giving an in-depth analysis of what he called the “universal coverage bill”—based on current Senate and House versions. His conclusion was that the interests of all the major healthcare industry stakeholders—satisfied in order to get political agreement—fared relatively well. He concluded the “major losers” will be the taxpayers upon whom the cost of the expansion of Medicare to 15–16 million new beneficiaries would fall. He declared acute care hospitals as the “biggest winners.”
In response to a question from a European in the audience who couldn’t understand why a single payer system wasn’t acceptable, Scully stated very strongly that the undertaking was extremely complex and the best that could be expected was an incremental change in the system. He admitted that it was very difficult to draft and pass the 2006 Part D drug legislation even with a heavily Republican dominated House and Senate.
There were 337 healthcare (276 public and 61 private) companies presenting to 1,387 public investors and 1,278 private equity and VC investors with record breaking number of 7,000 one-on-one meetings. Total registered attendees reached 6,500.
Public company presentations were Webcast live and are available on-demand (subject to company consent) for three months after the conference at events.jpmorgan.com.