Biotech Watchers Descend on San Francisco, Day One

Sarah Lacy

It’s day one at the J.P. Morgan Healthcare Conference and it’s a lot like years’ past. Some six thousand healthcare investors, analysts, companies, and venture capitalists have descended on the Westin St. Francis in San Francisco. And, so far, like in many past years you can sense the hope in the hallways.

After all, this is the annual conference that sets the discourse for the lifesciences and healthcare for the coming year. Not to mention the time when hot potential IPOs get an informal introduction to the big leagues. Industry watchers come with their fingers crossed and leave with an idea of what’s to come the remaining 11 months of the year.

So far, we’re still in that crossed fingers stage. Hallways are like rush hour traffic and the keynote lunch needed an overflow room. There’s standing room only not only for presentations by the big boys like Medtronic, but also for small, private companies. People are wheeling and dealing in the lobbies—so much so that it’s like squeezing your way through a crowded club to even get to the elevators.

Everyone’s saying (at least to the press) they are hopeful of a good 2005. Many biotech indexes were roughly flat last year, so there’s upside potential there. As for the IPO market, there’s more uncertainty. Last year some-20 biotech companies were able to go public—but the bulk are still trading below offering prices. Already more than a dozen have filed and are watching this conference eagerly. While there’s upside potential in performance, most venture capitalists would eagerly take a year of the same. After all what these companies need most is cash. For cost-intensive biotech, the IPO isn’t a time for VCs to recoup gains, it’s merely another funding event to continue clinical trials.

But the most concern seems to be around big pharma. There’s a sea change there, which Jamie Dimon, president and chief operating officer of JP Morgan Chase & Co. referenced in his lunch keynote. He said that economic ups and downs are to be expected in business. What you can’t predict is the sector that will be hit. In the early 1990s it was real estate. Post-bubble it was telecom. Now it’s big pharma. Drug pipelines have been dry for a while and now on top of that there are the controversies with drug marketing and possible ignoring of health hazards. The industry is undergoing a structural change, and companies need to heed it, he argued.

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