As the J.P. Morgan Healthcare Conference 2026 approaches, leaders in the pharmaceutical and biotechnology sectors are expressing renewed optimism about the industry's direction. Executives from Zymeworks and Zai Lab highlighted several factors contributing to this positive outlook, including increased dealmaking, alternative financing models, and a growing role for China in global biotech development.
Ken Galbraith, CEO of Zymeworks, noted that sentiment has improved compared to previous years as the sector appears to be recovering from a downturn. Josh Smiley, President and COO of Zai Lab, agreed that scientific and clinical advancements are supporting this cautious optimism. Both pointed out that reduced uncertainty regarding U.S. policy has encouraged more mergers and acquisitions (M&A) activity.
Their observations align with recent analyst reports showing that the XBI index—which tracks U.S. biotech company performance—rebounded nearly 75% since April after an initial decline earlier in the year. This marks a return to levels last seen at the end of 2021.
Smiley commented on the policy environment: "From the policy perspective, there’s less uncertainty about issues such as Most Favored Nation drug pricing," but he also acknowledged ongoing concerns about regulatory volatility. BioSpace recently reported significant turnover at the FDA's senior leadership during 2025.
The executives pointed to notable M&A activity as a sign of industry health. For example, Pfizer secured a $10 billion acquisition of Metsera after competing with Novo Nordisk for its obesity drug pipeline.
Galbraith emphasized that companies should not rely solely on being acquired but maintain independent strategies: "Zymeworks announced in November a decision to 'evolve from a traditional biotechnology company into a royalty-driven organization differentiated by in-house R&D capabilities,'" he said in a press release. He added that this shift followed promising late-stage clinical results.
Both leaders observed increasing interest in Chinese innovation within biotech. Galbraith noted competition from numerous well-equipped Chinese firms and highlighted emerging novel therapeutics from China, urging U.S. companies to match their speed and quality.
Smiley explained that China is fostering advances particularly in oncology and immunology: "China is nurturing innovation in oncology and broadly in the field of immunology and inflammation." He cited progress with antibody drug conjugates developed there and predicted neuroscience would be the next area of growth.
Zymeworks is leveraging opportunities outside North America as well, using resources in Japan, the UK, and Singapore to support its development efforts. Zai Lab maintains headquarters both in Cambridge, Massachusetts, and Shanghai; Smiley said this allows them to benefit from China's large patient base for clinical trials: "For example, access to China’s enormous patient base accelerated development, especially in oncology and immunology," he said.
Despite recent challenges at regulatory agencies like the FDA, Galbraith stressed that scientific innovation remains central: "Ultimately, drug innovation and strong science continue to be the primary drivers of opportunity." Smiley added: "Despite FDA turmoil, the fundamentals of FDA approval pathways, especially in oncology, remain steadfast." He advised companies to focus on established regulatory principles rather than daily political developments.
These trends will be discussed further on an upcoming episode of Denatured podcast scheduled for December 18.
