5 takeaways from JP Morgan 2025

I’m back from another week in San Francisco, where as usual I heard from experts and prognosticators about their expectations for the coming year in biotech. But this year prognostication was in short supply.

As Endpoints News’ Kyle LaHucik pointed out at the Informa Biotech Showcase’s media round-up panel, people seemed reticent to predict much of anything, perhaps owing to the uncertainty that surrounds a new presidential administration, especially this new presidential administration. But more on that later. Here are a few takes that I would say did emerge as consensus, at least at the events I attended and with the people I talked to.

1. We’re in for a good year for M&A, but the wealth might be less spread out

It’s always a good sign when a couple of big deals are announced right before the conference, and this year we saw a doozie in Johnson & Johnson’s announcement of its $14.6 billion planned acquisition of Caplyta maker Intra-Cellular Therapeutics. It’s a bigger deal than any deal announced in 2024.

There’re lots of reasons to believe that the somewhat muted deal environment of the last couple of years will be changing this year. For one thing, a number of companies are racing toward a big patent cliff and they need to secure new revenue streams. Though this cliff has been looming for some time, the losses of exclusivity are beginning in earnest in 2025 and 2026.

"If you take the forecast of assets for the top pharma companies and you look at where's the gap, there's like $50 billion of question mark revenue,” Greg Graves, a senior partner at McKinsey, said on a panel at Fierce JPM week. “That's going to have to come from dealmaking."

There’s a need for M&A, companies have plenty of dry powder, and the US Federal Trade Commission is about to get a whole lot friendlier.

"It's well documented that Lena Khan has sort of chilled dealmaking to an extent," Anis Ha, SVP and deputy general counsel for transactions and contracting at Lilly, said on one panel. “The new commissioner Adam Ferguson seems likely to operate more traditionally […] The creative arguments of the current administration are going to go by the wayside, which will unchill the dealmaking environment from a regulatory perspective."

Novo Nordisk’s global head of business development and M&A, John MacDonald, put it another way.

"It can't get any worse. It's going to go up from here, but by how much remains to be seen,” he said. "There's certainly optimism that it will get better, but only because it was so bad before."

But the character of the deals coming this year might not be a win for everyone involved. Most people agreed that there’re not enough late-stage assets out there to fill that gap, which means companies will need to spend some of their money on early and mid-stage assets, but they’ll still be looking to avoid as much risk as possible. So, while it might be a buyer’s market, companies will have to come into meetings with a lot of strong data to be considered.

And, since the goal is significant short-term revenue, the M&A might well take the form of fewer, larger deals, rather than more, smaller ones. The bottom line? Not every small biotech is going to find itself the beneficiary of this change in the M&A climate.

2. PBMs are in the crosshairs – IRA reform is possible, but less certain

The last two years at JP Morgan have been dominated by discussion of the Inflation Reduction Act, the landmark Joe Biden law that allowed Medicare to negotiate certain drug prices for the first time. Now, Joe Biden is gone, but the IRA still remains. No one is expecting that to change – after what happened with the Affordable Care Act in Donald Trump’s first term, he knows better than to try to repeal a popular law that improves American’s access to healthcare.

But pharma execs hope the incoming administration will be willing to tinker with the details, leading to what they consider to be common sense reforms to the IRA – starting with the so-called “pill penalty”, which refers to the shorter nine-year exclusivity period for small molecules to be considered for negotiation compared to the 13-year window for biologics.

Pharma – and its lobbying group, PhRMA – have shifted their messaging on drug pricing to really focus on encouraging reforms that don’t affect their bottom line, but greatly affect what consumers pay for their drugs, namely PBM reform and stopping Medicare 340B abuse. PhRMA sponsored an independent report, released shortly before JPM, which found that 50 cents of every dollar spent on brand medicines goes to entities not involved in making them, with PBMS taking the largest share.

PBM reform has been gaining support in Congress in the last year, and PhRMA’s Robert Zirkelbach says he’s hopeful we’ll see movement on it this year.

3. A new kind of innovation is coming out of China

One topic that seemed to come up over and over again was Chinese biotechs and how they’ve evolved in recent years. The biotech scene in China has gone from one mostly made up of “me too” drugs to one where true innovation is occurring. Add in the fact that Chinese companies are generally cheaper right now, and it’s no surprise that companies and investors are looking hard at these assets.

“There has been a significant and fundamental shift in the last five years in terms of the breadth, depth, and quality of assets coming out of China,” Gilead CFO Andy Dickinson said in a media briefing in San Francisco. “If you have management teams that have been trained in the United States or other developed countries that have gone back to China 10 years ago, what we saw coming out of China were more follow-on similar drugs, less differentiation. What we're seeing today is fundamentally different, first in class, best in class.

“The other thing that's unique is that the level of clinical data that they're able to generate in China at an early stage of development is differentiated from what we're seeing in the United States and Europe. It gives them a unique window into looking at the efficacy signals and safety signals to their drugs earlier on.”

Of course, the spectre of the BIOSECURE Act still hangs over any dealings with China. But industry representatives didn’t seem overly concerned, other than stressing a need to diversify supply chains.

4. The industry’s attitude toward AI continues to evolve, perhaps even mature

I’ll admit this is a weak sort of a takeaway, but the tenor of conversations about AI at this show has changed in the last couple of years. Now that generative AI (GenAI) has become so commonplace in the workplace in general, pharma people are starting to be a lot more specific with what they mean when they say AI – the sophisticated algorithms used in drug discovery and development, the GenAI-based chatbots for patient-facing use cases, or even “physical AI” – combining AI with robotics for next-generation applications in surgery and prosthetics, something NVIDIA was talking about at the show.

This is something of a relief for journalists and technologists, who were starting to become frustrated with the vague and hype-laden use of the term AI over the last couple of years.

There’s also a growing recognition of machine intelligence as something distinct from human intelligence – not better or worse in every way, but better at some tasks and worse at others. Flagship Pioneering CEO Noubar Afeyan discussed the concept of “polyintelligence”, the idea of recognising three distinct kinds of intelligence: human, machine, and natural. The latter describes, for instance, the pseudo-intelligence of viruses and bacteria rapidly evolving to counter vaccines and treatments meant to stop them.

Agree or disagree with the framing, it’s a great example of an industry that finally understands AI well enough to thoughtfully consider its applications and its place in the larger picture of the industry.

When investors talked about AI at the various events I attended, they spoke about it the same way: as a tool, as something they look for their companies to use intelligently, but not generally as a product or service in and of itself to invest in.

5. Women’s health is a space with momentum, but the industry still needs to buy in

Women’s health has been growing in importance as a topic for the last few years, but there’s still a perception that it’s a subset of healthcare, a niche area. In reality, it’s a term that refers to the health and wellbeing of 50% of the population in every aspect of their care.

Yes, menstruation, menopause, pregnancy, endometriosis, and other exclusively female health topics are greatly understudied and under-addressed in the market, and that’s a huge problem in and of itself.

But women also present differently than men in a whole host of conditions, from heart attacks to autism, and this variance is often ignored by the healthcare system, leading to misdiagnoses and poorer health outcomes. Generations of health research underrepresented women in research populations, leading to male-skewed diagnosis and treatment recommendations across the healthcare system.

At Fierce JPM Week, then-First Lady Dr Jill Biden spoke about the Biden Administration’s recent commitments to increased funding for studying women’s health – $200 million from the NIH and $113 million from ARPA-H. But her goal at the conference was to encourage the private sector to step up – not out of altruism, but out of self-interest.

“There's a whole market out there of women […] who are just waiting for anything that will help them live longer, healthier lives," she said.

Historically, mainstream investors haven’t seen it that way: they’ve tended to dismiss female founders and women’s health companies because of a lack of proven success in the market, a bit of a Catch-22, according to Alice Zheng, a women’s health-focused investor at Foreground Capital.

"The business case is really important," Zheng says. "For women's health to be truly mainstream, it has to be about the investment and the business case and it's about finding the data to show that."