On screen:
A woman with dark hair, brown eyes, and wearing a black shirt and jacket, Jessica Fye.
Text on screen:
Jessica Fye, Senior Analyst, Large-Cap Biotechnology, J.P. Morgan Research.
Jessica Fye:
In 2023 in the biotech group, it’s going to be a really dynamic period, depending on whether you’re talking about the large caps, which may be heading into interesting product launches, or the mid caps, which could have make-or-break data releases or they’re filing their first NDA for their very first product. I think you’re going to continue to see a lot of dynamism in this sector, a lot of innovation, and it will be another interesting year for the group. In terms of what investors have high conviction in right now, they’re looking for: growing, durable franchises, a clear path to profitability if not already profitable, ideally operating in low-competitive intensity spaces and/or representing the dominant player in their space.
On screen:
A montage shows biomedical researchers working in a busy laboratory.
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What investors are looking for:
- Growing, durable franchises;
- clear path to profitability;
- (and) low competition.
Side note:
Small print text appears.
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Source: J.P. Morgan estimates, December 8th, 2022.
Jessica Fye:
And I think folks are trying to avoid or be careful around companies that have imminent patent expirations without a clear path to profitability or without a highly visible pipeline. M&A is always a topic and a theme. This sector to some extent relies on larger companies kind of rolling up these smaller, sometimes earlier stage assets.
On screen:
A chart appears, titled "Large Cap biotech and Diversified biopharma capital deployed for M&A activity." It shows:
- 18 billion dollars of Public M&A deals in 2012;
- 37 billion in 2013;
- 131 billion in 2014;
- 125 billion in 2015;
- 58 billion in 2016;
- 56 billion in 2017;
- 105 billion in 2018;
- 201 billion in 2019;
- 96 billion in 2020;
- 45 billion in 2021;
- (and) 60 billion dollars of Public M&A deals in 2022.
Side note:
Small print text appears.
Text on screen:
Source: J.P. Morgan estimates, through December 12th, 2022.
Jessica Fye:
I think you’ve seen a theme of a little more focus on more de-risked assets. I wouldn’t be surprised if that continues. I still think this is a sector that’s most important underpinning is innovation, and we still see that continuing at a very high level and don’t expect that to change in ’23.
Logo:
J.P.Morgan.
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Legal disclosures appear.
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