JH Explorer: Takeaways from the 2025 J.P. Morgan Healthcare Conference

For the last 25 years, members of the Healthcare Team have attended the annual J.P. Morgan Healthcare Conference, a week-long event that takes place every January and helps set the tone for the sector for the coming year.

The 2025 conference, held in San Francisco, came at a key moment: Healthcare stocks sold off the month before, following Robert F. Kennedy, Jr.’s controversial nomination to head the Department of Health and Human Services, along with a number of high-profile drug candidates that suffered negative data readouts. The tragic killing of United Healthcare’s CEO also led to heightened security concerns.

Early dawn in San Francisco during the 2025 J.P. Morgan Healthcare Conference.

But amid a stretch of unusually nice weather (rather than the typical driving rain), this year’s conference was lifted by the sector’s promising innovation. Our calendars were booked from morning to night, attending company presentations and meeting one-on-one with executives and industry leaders. Here, some highlights and takeaways from the week:

Valuations seem out of step with fundamentals

Healthcare’s pullback at the end of 2024 seemed out of step with updates provided by companies throughout the week, including promising pipeline developments and unusually successful product launches. Through the end of 2024, for example, one small-cap biotech stock suffered a double-digit decline after hitting a high in November. But the company delivered no negative news. On the contrary, at the conference, management gave encouraging updates on the firm’s novel platform for neuromuscular diseases such as Duchenne muscular dystrophy and facioscapulohumeral muscular dystrophy. The company is expected to deliver multiple data readouts both this year and in 2026, and our confidence in the leadership team grew only stronger after meeting with them.

M&A activity could rebound

Last year, just $45 billion in merger and acquisition (M&A) activity was done, roughly half the 10-year average. Notably, not a single acquisition greater than $5 billion was announced, which may have contributed to negative investor sentiment, particularly for biotech.

But companies often announce acquisitions at the J.P. Morgan Conference, and this year Johnson & Johnson kicked things off with a $15 billion bid for Intra-Cellular Therapies, the biggest deal for the sector in more than a year. In addition, a number of private companies were scooped up, including Scorpion Therapeutics, bought by Eli Lilly for up to $2.5 billion, and GSK’s purchase of IDRx for $1 billion.

We think the deals could be a prelude of what’s to come in 2025. Pharmaceutical companies face over $250 billion in patent expirations through the end of the decade, putting pressure on the industry to rebuild pipelines through M&A. Furthermore, expectations for a more lenient Federal Trade Commission under the Trump administration could also encourage dealmaking.

Biotech not the only area delivering rapid innovation

This year’s conference may have been one of the most important for medtech, which has experienced rapid changes in terms of new product launches and a bifurcation between “have” and “have-not” companies. At the conference, our view that medtech is a stock-picker’s market – with opportunities to tap into unusually strong growth – was confirmed.

One company, for example, reported that electrophysiology (EP) procedures – diagnostic and therapeutic tests used to treat abnormal heart rhythms (arrhythmias) – have exploded in number, and projected significant demand for the procedures for the foreseeable future. Helping propel this surge is a new technology called pulsed field ablation (PFA) for atrial fibrillation, a common form of abnormal heart rhythm that can increase the risk of stroke. PFA has proven to be a safer option than older techniques and, as a result, has seen strong adoption since the first PFA won regulatory approval little more than a year ago. With demand for the procedure accelerating and expected to exceed historical averages in 2025, PFA revenues could deliver yet another year of significant growth.

Such opportunities are helping drive M&A in medtech, as well: In January, Stryker announced it would pay $5 billion for Inari Medical, a leader in peripheral vascular devices that treat a variety of blood clot conditions, and Boston Scientific revealed it would buy its remaining stake in cardiovascular company Bolt Medical for up to $664 million – both signs that healthcare’s innovation is alive and well, in our view.

Health care industries are subject to government regulation and reimbursement rates, as well as government approval of products and services, which could have a significant effect on price and availability, and can be significantly affected by rapid obsolescence and patent expirations.