With the biopharma industry performing better of late, analysts, executives and other industry watchers are “cautiously optimistic”—a term heard all over the streets of San Francisco at the J.P. Morgan Healthcare Conference earlier this month.
Love it or hate it, the annual J.P. Morgan Healthcare Conference pulls the entire biopharma world into one space in San Francisco for one week only. It’s the best way to take the pulse on sentiment across the industry. In recent years, “cautious optimism” has been the mantra—and this year was no different.
“Thinking back to last year, we feel a renewed sense of true optimism for the sector,” BMO Capital Markets analysts wrote in a January 16 note. “It’s early in 2026, so we won’t get carried away, but investors and corporate seem to be acknowledging this, too.”
Attendees, buoyed by a flurry of M&A activity in the fourth quarter and several recent biotech IPOs, wanted to believe that the industry was back. But still, the past six years of turmoil in the industry have taught some hard lessons. And without a major deal to point to at the start of the conference, attendees were left hopeful but restrained.
“No big deals, but hope is in the air,” BMO wrote.
The industry is undoubtedly performing better lately, John Wu, managing director and partner in the health care group at consulting firm BCG, told BioSpace on the sidelines of the conference. Wu was encouraged to see Big Pharmas sniffing around earlier-stage science again. He still thinks deals will remain focused on late-stage gambits, though, as companies look to fill specific holes in their portfolios with derisked assets as major products face patent expirations.
“They have no choice but to go for late-stage pipeline [assets],” Wu said. Merck, in particular, has been busy, given the imminent decline of Keytruda.
But companies without looming loss of exclusivity (LOE), or those with more capital constraints, are interested in earlier science, Wu noted. Big biotechs, too.
“If you think about the Regenerons or the Alnylams or the Vertexes of the world, they’re probably also reaching into an early space to find next generation technology to augment their platform, in the case of Alnylam, or assets that will open up new opportunities for them, in case of Vertex,” he said.
This all comes as R&D priorities are shifting to more prevalent diseases, whereas the focus in the past 10–15 years had been on orphan diseases, which offer quick approvals and simpler trials. GLP-1s changed all of that. Wu pointed to neuroscience, heart disease, kidney disease and metabolic disease in general as key areas of excitement across the industry.
Hair loss biotech Pelage Pharmaceuticals has certainly seen the GLP-1 bump; CEO Dan Gil attended a dermatology summit the weekend prior to JPM and got to see this firsthand.
“Certainly, the GLP-1s are driving both consumers and companies into the aesthetic space,” he told BioSpace. But there’s good reason for investors to be interested in conditions like androgenetic alopecia, commonly known as pattern baldness. “It’s been kind of a dormant area of lotions and potions, and we’re finally seeing people begin to recognize that there’s actually a lot of really cool science to be done there.”
As for the dynamics in the GLP-1 space itself, Wu said the decline of prices for these medicines has had an impact on investor interest, but the next wave of treatments is still drawing dollars. The potential addressable population is just so large that even securing a small part of the market could be lucrative. Patients are also dropping off after a period of treatment and may be willing to try other medicines to address the often life-long condition of obesity, Wu added.
With many companies, including Novo Nordisk, bragging about deal capacity, Structure Therapeutics and Viking Therapeutics saw share gains, BMO noted. “Obesity takeout targets are still fashionable for investors.”
Wu expects deal size to remain relatively small, in the $5 billion to $20 billion range, with little appetite for transformative megadeals.
A Geopolitical Advantage
U.S. companies aren’t the only ones innovating. A major topic at JPM was the rise of biotech in China. Part of that was concerns about the U.S. ceding its scientific prowess to the nation.
“If you’re sourcing from China, you’re probably not sourcing as much elsewhere,” Wu said.
But others were just excited about the possibilities.
“We will look for innovation wherever it emerges. And right now, China is a great place to do that,” Robert Plenge, chief research officer at Bristol Myers Squibb, told BioSpace on the sidelines of JPM.
Executives from Galapagos, Novartis, Novo Nordisk and Biogen also told BioSpace that they have teams hunting for promising drugs in China.
Marc Appel, managing partner at venture capital fund Pacific Bridge NY, added a rarer point-of-view at a panel event on the sidelines of JPM26: that the increasing rush of pharma companies to China for assets and deals was, in fact, a mutually beneficial arrangement for both the U.S. and China. And that even though there’s been discussion of blocking off Chinese entities from the American pharma industry, that hasn’t actually happened.
“Although there’s been a lot of headlines, there hasn’t been that much of a crackdown on large pharma deals with the Chinese ecosystem. There really is a win-win opportunity,” Appel said. He explained that U.S. patients can only benefit from China’s innovation.
“China is benefiting from the resources and clinical capabilities in the U.S. It [is not] necessarily providing a true geopolitical advantage. This is actually a spot where for collaboration is good for everybody at the same time.”
Flight of the Capital
Despite the positivity, there was an undercurrent of unease across the City by the Bay. The lack of a major M&A deal was one thing, but others seemed loathe to declare that biotech in particular was back after a tough year of policy drama and punishing FDA decisions that ushered a new era of uncertainty into the industry.
At a panel discussion kicking off the conference, Richard Burr, former North Carolina Senator and Ranking Member of the Senate’s Committee on Health, Education, Labor, and Pensions, generally sounded positive about the direction the pharma industry was going.
“In chaos there is opportunity,” he said, when discussing the effect of the Trump administration’s health policies, like Most Favored Nation drug pricing and tariffs. “Are you going to focus on the chaos or spend the time focusing on the opportunity? I think that’s why it’s so important that there’s an event like this in SF.”
But even Burr had to acknowledge there was reason for uncertainty on the investor side, and that the administration itself is aware of the problem.
“Commissioner Makary is here,” at JPM, Burr added. “There’s an opportunity to corner him.” Most CEOs Burr had spoken to at the meeting said that they had communicated that uncertainty to the Commissioner. “And he’ll say, ‘Thank you, I agree.’”
“The administration is very aware of the flight of capital dollars” from the industry over the past few years, he said. What the administration might actually do about it, though, he did not say.
Speaking of dollars, the fourth quarter and year-end earnings season began last week with Johnson & Johnson, as always, starting things off for the biopharma industry. BMO Capital Markets evoked that common refrain again, in a Monday note recapping the news to come: “Coming back from SF, we sense investors remain cautiously optimistic, but this earnings season is where the rubber meets the road.”
