The annual J.P. Morgan Healthcare Conference in San Francisco brought together the biopharma industry to gauge sentiment and discuss trends for 2026. Despite ongoing challenges, analysts and executives expressed a sense of optimism about the sector's future.
BMO Capital Markets analysts stated, “Thinking back to last year, we feel a renewed sense of true optimism for the sector. It’s early in 2026, so we won’t get carried away, but investors and corporate seem to be acknowledging this, too.” However, they also noted the absence of any major deals at the start of the conference: “No big deals, but hope is in the air.”
John Wu, managing director and partner at BCG’s healthcare group, told BioSpace that industry performance has improved recently. He observed that large pharmaceutical companies are showing renewed interest in earlier-stage science as they seek assets to fill gaps caused by impending patent expirations on major products. “They have no choice but to go for late-stage pipeline [assets],” Wu said. He highlighted Merck’s activity as it prepares for Keytruda’s decline.
Wu also mentioned that companies without imminent loss of exclusivity or those facing capital constraints are turning their attention to earlier-stage research. “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.
Research and development priorities are shifting toward more common diseases such as neuroscience disorders, heart disease, kidney disease, and metabolic conditions. The emergence of GLP-1 drugs has influenced this trend by expanding focus beyond orphan diseases.
Dan Gil, CEO of Pelage Pharmaceuticals, noted increased interest in aesthetic medicine driven by GLP-1s: “Certainly, the GLP-1s are driving both consumers and companies into the aesthetic space,” he told BioSpace. He added that there is growing scientific recognition around conditions like androgenetic alopecia: “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.”
Wu explained that while falling prices for GLP-1 medicines have affected investor interest somewhat, new treatments continue to attract investment due to their potential market size. He pointed out that patients often discontinue these medications after some time but may try alternative therapies for obesity management.
According to BMO Capital Markets’ observations during recent trading sessions involving Novo Nordisk and other firms such as Structure Therapeutics and Viking Therapeutics: “Obesity takeout targets are still fashionable for investors.” Wu expects deal sizes will likely remain between $5 billion and $20 billion rather than seeing transformative megadeals.
A notable topic at this year’s conference was China’s increasing role in biotech innovation. John Wu remarked on sourcing from China: “If you’re sourcing from China, you’re probably not sourcing as much elsewhere.” Robert Plenge from Bristol Myers Squibb added: “We will look for innovation wherever it emerges. And right now, China is a great place to do that.”
Executives from Galapagos NV (https://www.glpg.com/), Novartis (https://www.novartis.com/), Novo Nordisk (https://www.novonordisk.com/), and Biogen (https://www.biogen.com/) reported active searches for promising drug candidates in China. Marc Appel from Pacific Bridge NY offered another perspective: “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 further explained: “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 collaboration is good for everybody at the same time.”
Despite positive signs—including increased M&A activity at year-end—concerns remained among attendees regarding policy uncertainty and regulatory decisions affecting biotech investments over recent years.
Former Senator Richard Burr commented on industry prospects amid political changes: “In chaos there is opportunity,” he said regarding health policies under previous administrations. Burr acknowledged investor uncertainty but emphasized engagement with regulators: “Commissioner Makary is here,” at JPM…“And he’ll say ‘Thank you I agree.’” Burr concluded by noting awareness within government about capital outflows from biopharma but did not specify what actions might follow.
As earnings season begins—with Johnson & Johnson leading off—analysts expect investor sentiment will be tested against actual financial results moving forward.
