JPM 2026: What it revealed about biotech’s new reality

Every January, San Francisco becomes the centre of gravity for the global pharmaceutical industry. The JPM Healthcare Conference is where narratives are tested, deals are advanced, and the collective mood of the sector becomes legible.

The conference is also an opportunity to do something different: to convene structured conversations that cut through the noise.

Roundtables at JPM

The industry’s most pressing challenges cannot be understood from any single vantage point. A biotech CEO wrestling with capital constraints sees the market differently from the BD head at a large pharma company drowning in licensing proposals, or the investor recalibrating return expectations. And a roundtable format forces these perspectives into the same room.

What emerged through such discussions was not optimism nor was it pessimism, but clarity. The consensus was striking in its consistency across sessions.

A recovery built on substance, not spectacle

JPM 2026 signalled genuine recovery – but not the kind the industry has historically celebrated. There were no headline mega-deals to announce from the rooftops. Instead, participants reported something arguably more valuable: real engagement. Sponsors described meaningful investor conversations where, in recent years, such interactions had been nearly absent. Discussions that had stalled for six months or longer showed signs of advancing. The atmosphere was one of purposeful activity, rather than performative confidence.

Roundtable participants agreed that the traditional venture model – the portfolio approach premised on a small number of outsized wins compensating for many failures – is increasingly misaligned with how capital is now allocated. Limited partners have redirected investment toward sectors perceived as offering more predictable returns, from artificial intelligence to climate technology. This is not a temporary dislocation. It is a structural shift that demands new approaches to how biotech companies are built, funded, and ultimately valued.

Redefining what “fundable” looks like

Going into the conference, it was expected that perhaps 5% to 10% of meetings would reveal genuinely investment-ready companies. The reality was more encouraging. A noteworthy proportion of smaller companies demonstrated preparation that exceeded expectations: clear target product profiles, development strategies reflecting multi-jurisdictional regulatory requirements, and capital needs aligned with realistic timelines.

This improvement reflects the selective pressure that constrained markets impose. Companies that survived the funding drought did so by developing more rigorous approaches to strategy and communication. Those that persisted with unrealistic positioning largely exited the landscape or kept moving sideways. What distinguishes the companies now attracting capital is a specific capability: the ability to articulate why a particular development budget is commercially appropriate and offers competitive risk-adjusted returns – even when the outcome may not be a blockbuster. Products with peak sales potential of $100–300 million can represent successful outcomes, but they require fundamentally different development economics.

The development gap, and the Eastern challenge

A consistent finding across the roundtables was that drug development strategy remains the area most in need of industry-wide improvement. Analysis continues to suggest that approximately 85% of clinical studies could be designed more efficiently. Many programmes proceed without commercially relevant target product profiles, with only a fraction maintaining dynamic assessments that account for competitive landscape evolution. Contract research organisations, despite their operational capabilities, have not consistently filled this strategic gap – the industry mostly stands ready to provide, but less so ready to think.

Meanwhile, the maturation of Asian biotechnology – particularly from China and Korea – represents perhaps the most significant structural development visible at JPM 2026. Leading Chinese companies now compete directly with large pharmaceutical organisations on scientific merit, often achieving early clinical signal at a fraction of comparable Western expenditure. China accounts for approximately 20% of all drugs in global development, nearly double the combined share of the five largest European markets. The quality of these programmes demands serious attention: they are no longer me-too molecules competing primarily on price.

For Western pharmaceutical companies, this creates a fundamental supply-demand mismatch. Business development teams already operating under significant capacity constraints are now presented with an unprecedented volume of opportunities from Asian developers – often extensive pipelines at early stages, without the clear differentiation or transaction-readiness that efficient evaluation requires.

The agility imperative

If there was a single theme that unified every roundtable conversation, it was this: the industry’s tolerance for deviation from fundamentals has evaporated. Sound science, rigorous development, realistic positioning, and effective execution remain the prerequisites for success. What has changed is that companies can no longer compensate for weakness in any one of these areas with strength in another.

This demands a new kind of organisational agility. For biotech companies, it means building development strategies that are commercially informed from the outset – not as an afterthought bolted on before a licensing conversation. It means engaging regulatory authorities early and substantively, and treating those interactions as opportunities for constructive guidance, rather than bureaucratic formalities. It means planning manufacturing strategy alongside clinical development, not deferring it until late stages when options narrow and timelines compress.

For large pharmaceutical companies, agility means evolving how they engage with the biotech ecosystem. Standard business development processes presume functional counterparties with coherent governance and realistic expectations. The reality is that many scientifically compelling programmes are stalling not because the molecules lack merit, but because the organisations surrounding them have reached the ceiling of their capabilities. Companies willing to embrace the complexity of engaging with challenged assets – accepting that the value requires extraction – can access opportunities that competitors overlook.

And for the industry as a whole, agility means recognising that the question is no longer whether Asian biotechnology produces assets worthy of attention, but how to integrate global capabilities most effectively. Development strategies that leverage cost advantages across regions while maintaining quality standards represent the emerging norm. The companies and organisations that adapt to this reality will define the next phase of pharmaceutical innovation. Those that do not will find the market has moved on without them.

The current environment, for all its complexity, represents genuine opportunity – but only for those prepared to meet it on its own terms.

About the author

Ali Pashazadeh is founder and CEO of Treehill Partners. He has 20 years’ experience at Goldman Sachs, UBS, and Blackstone as a healthcare investment banker, advising companies on large, complex, global strategic transactions. He also has 30 years ongoing experience as a trauma and reconstructive surgeon, and as a biotech CEO.