At JPMorgan XXIV: Mostly Pharma but Little Strategic Agreement
The diversity of messages from the Big Pharma presenters at this important conference reflected the broader investment uncertainty about the sector. Investors weren't certain about the biotech business model either, though they packed the rooms. Among the basic arguments: whether the returns from companies pursuing compounds against novel targets will trump the returns from those companies pursuing precedented mechanisms.
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Overheard at JP Morgan's 25th Health Care Conference: Making Up for Lost Drugs: Pharma Attempts to Appease Investors
The annual JP Morgan conference has always been a stage for reviewing new solutions to the basic business-model problem of biotechnology. But as Big Pharma's troubles have grown, the conference has also become a showcase for large drug company problems. The quick fix: keep shareholders in the stocks by returning cash to them. Medium term: adopt one of four basic business models. Longer term: disaggregate.
As Big Pharma finds itself searching for products in smaller, more specialist markets, biotechs must decide whether it is better to take a product to market alone and reap the rewards while dealing with the risks, or take the money and run. Such is the happy dilemma for biotechs developing new drugs for HCV, an exploding market blessed with quick development timeframes and early proof-of-concept potential.
Over the past five years, big cap device companies have been some of the strongest performers among all life science stocks, and this year's conference represented something of a renaissance of device companies. However, most interesting wasn't so much the revival of interest in device stocks itself, but the message that device companies sent and that investors are embracing: "Forget about the hype; slow and steady wins the race."