J.P. Morgan Healthcare Conference 2016 Highlights: Strategic Insights, Drug Pricing Debates, and Breakthrough Diagnostics

From January 11 to 15, 2016, the prestigious 34th Annual J.P. Morgan Healthcare Conference was grandly held in San Francisco, USA. The J.P. Morgan Healthcare Conference convenes numerous corporate leaders, healthcare investors, and investment institutions each year to jointly discuss future industry trends and explore additional collaboration opportunities. As such, the J.P. Morgan Conference has become a global summit for investment and mergers and acquisitions, serving as a bellwether for the entire healthcare industry. By listening to insights from top industry leaders, attendees can gain access to the most cutting-edge pulse of the sector.



Insights from Pharmaceutical Giants

Johnson & Johnson CEO Alex Gorsky Shares Insights into the Company’s Enduring SuccessUnlike most biotechnology and medical device companies that constantly emphasize breakthrough innovation or disruption, Johnson & Johnson takes a different approach, largely because it is currently in a period of quiet development. Over the past decade, the company has maintained a balanced allocation between internal R&D and external investments, at approximately 55% and 45%, respectively. Furthermore, Johnson & Johnson is reluctant to overlook any nascent growth opportunities. Once identified, the company commits fully to clinical development, rigorous regulatory compliance, and global marketing and promotion, ultimately creating billion-dollar markets.

Merck’s cancer immunotherapy drug Keytruda, as the first FDA-approved anti-PD-1 agent, has demonstrated excellent clinical performance. How much further can Keytruda’s potential be expanded in the future? Ken Frazier, CEO of Merck, highlighted the company’s ongoing efforts: conducting 200 clinical trials and more than 80 combination studies to validate Keytruda’s compatibility in various treatment regimens. This extensive work underpins Mr. Frazier’s bold assertion that Keytruda is essentially a single product encompassing an entire production pipeline. Additionally, the CEO emphasized that several successful acquisitions have been crucial to Merck’s development.



Balancing Strategies in Drug Pricing

At the conference, CEOs of biotechnology companies stated that industry peers should unite to jointly explore solutions for maintaining stable drug prices, balancing the encouragement of innovation in new drug development with greater affordability. Sir Andrew Witty, CEO of GSK, believes that the primary driver of innovation in pharmaceutical companies is the pursuit of better treatments. The pharmaceutical industry should make greater efforts to collaborate with other stakeholders, including governments, to stabilize drug prices, ensuring that the public can afford daily medical expenses while allowing research and technology enterprises bearing R&D risks to receive their due returns.

In fact, rising drug prices are a global phenomenon, causing investors to hesitate about entering the market at high valuations. George Scangos, CEO of Biogen, believes that this challenge can be addressed by innovating and developing new drugs to lower prices. Biogen, which primarily focuses on multiple sclerosis (MS) medications, has historically funded its new drug development through profits from sales of its existing drugs. Now, Biogen plans to reinvest the profits from its MS therapies into the development of newer treatments for Alzheimer’s disease, thereby creating a self-sustaining cycle of innovation.

Matrix of Genetic Testing Companies

At the conference, Illumina CEO Jay Flatley announced the launch of three new products: 1. The next-generation sequencing platform, the targeted sequencing system MiniSeq. Based on existing sequencing technologies, this system supports applications ranging from single-gene to pathway sequencing and is suitable for all DNA and RNA targeted applications; 2. A semiconductor-based sequencing system currently under development, which integrates semiconductor chip technology with sequencing-by-synthesis (SBS) technology, scheduled for commercialization in 2017; 3. Infinium XT, a BeadChip capable of processing 96 samples, enabling genotyping of up to one million samples annually with detection of up to 50,000 markers per sample.

Meanwhile, Illumina announced that its subsidiary, Grail, will screen for cancer in healthy populations, integrate non-invasive prenatal testing (NIPT) for Down syndrome into its cancer detection workflow, and thereby reduce cancer mortality rates. The subsidiary boasts prominent investors, including an Amazon board member and Bill Gates. This test stems from a revolutionary discovery made by Illumina six months ago, which enabled the prediction of cancer through blood tests.



The Chairman of 23andMe stated that the company has now validated several potential targets and will continue its R&D efforts to identify additional drug targets. As a direct-to-consumer (DTC) enterprise, 23andMe’s core businesses include genetic testing, data interpretation and analysis, and drug development. Additionally, it provides data to researchers at academic institutions and biotechnology companies to support their scientific research. In October 2015, 23andMe secured $115 million in Series E financing, with plans to establish a drug R&D platform in San Francisco.

Marc Capone, CEO of Myriad Genetics, introduced several tests under development by the company, including “Vectra DA,” a risk assessment test for rheumatoid arthritis-related damage; currently, 40% of rheumatology patients in the United States are prescribed this test. Additionally, the company offers Prolaris, a biopsy-based test for prostate cancer patients. Prostate cancer screening in the U.S. is supported by an annual dedicated fund of $200 million from medical insurance payers. Finally, Myriad Genetics also provides myPath, a melanoma diagnostic test.



Kim Popovits, CEO of Genomic Health, introduced Oncotype DX, a breast cancer testing product based on NGS liquid biopsy. This test helps physicians and patients determine the optimal treatment plan for breast cancer. For invasive breast cancer, the Oncotype DX Breast Recurrence Score assay predicts the benefits of chemotherapy and the likelihood of distant recurrence.

Alere CEO Namal Nawana introduced the company’s in vitro diagnostic products and its Alere i and Alere q molecular diagnostic instruments. The Alere i offers faster and more accurate detection compared to other traditional molecular diagnostic methods. Featuring an isothermal platform, it enables qualitative detection of infectious diseases. Its unique isothermal nucleic acid amplification technology delivers molecular results within minutes, helping users make more effective clinical decisions.



Alere q is a fully automated nucleic acid testing platform that performs molecular testing and meets the operational requirements of any healthcare institution. The Alere q series comprises two models: the Alere q Analyzer and the Alere q HIV-1/2 Detect Molecular Diagnostic Instrument. Alere q is not currently marketed in the United States.

Enterprises Continue to Make Large-Scale Acquisitions

Anthem CEO Joseph Swedish expressed confidence in the company’s $47 billion acquisition of its smaller rival, Cigna, following approval from antitrust regulators. Rumors of Anthem’s interest in acquiring Cigna first emerged as early as June 2015, and the deal now appears all but certain. Swedish believes that if the merger proceeds as planned, Anthem will become the largest health insurance provider in the United States. He hopes the completion of the deal will not come too late.

In fact, it is not only insurance companies that are keen on mergers and acquisitions for expansion; U.S. hospital executives share this strong interest. Samuel Hazen, President of HCA Healthcare, which operates 166 hospitals, plans to add emergency centers and expand outpatient services. Additionally, Charlie Francis, Chief Strategy Officer (CSO) of Dignity Health, stated that Dignity Health is actively preparing for expansion and is open to engaging in partnership discussions with other hospital networks.