Commenda Takeaways from JPM 2020 Healthcare Conference
By F. Javier Perez
Another year, another chaotic few days of meetings and events surrounding the JPM Healthcare Conference in San Francisco. As we slowly recover from all the activity, we thought it would be useful to share some of our take-aways from the week. As always, all the events surrounding the JPMorgan conference provided invaluable insights to anyone focused on healthcare innovation.
Biotech has historically been a main focus of “JPM week”. The focus is still biotech, but there has been a clear move towards other sectors of the healthcare industry such as medtech and digital health. Large concurrent events such as the Startup Health Festival, Medtech Showcase, and RESI have clearly shifted some of the attention towards medtech and early stage innovators.
In the biotech space, there were no large M&A deals announced this year as opposed to year’s past. In fact, the largest M&A deal announced during the week wasn’t in biotech at all. It was Teladoc’s announced agreement to acquire enterprise telehealth solutions provider InTouch Health for $600 million. Many industry participants continue to view oncology and rare diseases as attractive opportunities. Oncology drug trials are currently surging and large investments continue to pour into the space. We are currently intrigued by innovations that hope to speed up clinical trials, clinical decision support, and other ancillary tools and support services necessary to accelerate both diagnostics and drug development Interest is surging in contract research organizations (CRO), clinical research management, drug discovery, and pharmacy distribution. Neuroscience was an interesting talking point with many folks at the conference, stressing the potential of the technology especially given the aging baby boomers with neurological issues.
In diagnostics, we heard from many investors that this sector appears to be coming back into favor as well, after many years of being sidelined.
From a digital health perspective, the tone appeared cautious but with optimism for continued growth. The drive to a more consumer driven healthcare system remains unabated with strong investor interest and many companies focused on patient engagement and personalized medicine. As healthcare costs become more of a burden to American families, institutional investors and industry players remain focused on solutions that can help lower costs or drive efficiency. While the progress of technology is inevitable, we do find caution to be prudent as digital health solutions have at times struggled to gain footholds in our existing health delivery system. gain footholds in the existing health delivery system and with patients. However, for those companies that can prove their product or service to be unique and differentiated, we expect significant investments and long-term success to follow.
We also see growing skepticism surrounding technologies that continue to otherwise drive a lot of excitement – AI, Blockchain, robotics, and genomics – to name a few. In the case of AI, consensus appears to be that we are finally at a place where AI is offering real results, but those results may not match up with the expectations from years past. To succeed, we believe these early stage companies need to prove how they can create value for patients, payors and providers alike.
From a transaction perspective, we believe valuations are likely to remain relatively high for now with deal flow continuing at a rapid pace through 2020. At nearly 18% of GDP, Healthcare is becoming an ever-larger component of the US economy. The presence of the “tech titans” at last month’s JPM week was just one data point pointing to more and more interest in the space.