JPM2025 Concludes: Undercurrents Among Pharmaceutical Giants, China's Innovation "Involution"

The New Year for the biopharmaceutical industry in 2025 does not start on January 1, but rather with the influx of people to San Francisco. A wave of investors and corporate executives gathered at the JP Morgan conference to chart a roadmap for 2025 and assess and discuss the prospects in the financial and political arenas.

The sunny weather in San Francisco during JPM week is a stark contrast to the heavy rains of the past two years, but the atmosphere was still tense at the start of the conference due to the recent attack on Brian Thompson, CEO of United Healthcare. Starting from Sunday, security measures were heightened, with police guarding the entrances and individuals in blue-black jackets marked "Security Team" patrolling around the Westin Plaza. Several insurance companies, including Cigna and Centene, withdrew from this year's conference, having participated in previous years.

Chinese participants were concerned about the severe wildfires in Los Angeles before their departure, worrying about potential impacts on their travel plans.These seem to suggest that we are in a world full of variables and uncertainties, and the atmosphere at the venue could perhaps be summarized in the same way.

Despite the sunny weather, some felt that the streets around the Westin were quieter than in previous years. James Hackworth, Chief Business Officer of Tris Pharmaceuticals, stated, "It feels like there are fewer people, but I've only been to a few places, so it might just be a feeling." The feelings of Chinese participants were clearly different, as this year might see the highest number of Chinese attendees.

Increased security measures outside the Westin Hotel / Photo provided by the interviewee

However, whether it is quiet or bustling, everyone comes to JPM with the same purpose - not wanting to miss the opportunity to talk to anyone.

In the past few days, most founders and executives traversing Union Square in San Francisco, as in previous years, are still striving for two things - finding funding and locating partners for developing new drugs, and as an industry community, reigniting market excitement for the biopharmaceutical sector.

Thousands of executives gathered in one place make JPM a good barometer of industry sentiment. What will happen in the biopharmaceutical industry in 2025? JPM has already laid many hints.

Neither optimistic nor pessimistic, "let's wait and see what happens next."

One of the characteristics of JPM week is that many merger and acquisition deals are usually announced before the conference opens, which sets the tone for the conference atmosphere.

Undoubtedly, mergers and acquisitions will activate investment in the biopharmaceutical industry, and the lack of large-scale mergers is also one of the important reasons for the recent downturn in this sector.

Data may explain some issues; the closely watched biotechnology stock index XBI fell about 2% in early trading on Monday, indicating that more mergers and acquisitions are needed to stimulate investors.

The gloomy atmosphere before this year's JPM conference was changed by a deep-water bomb dropped by Johnson & Johnson. On January 13, Johnson & Johnson announced the largest biopharmaceutical acquisition in over a year, acquiring Intra-Ccell Therapies for $14.6 billion. Since there were no biopharmaceutical deals exceeding $5 billion throughout 2024, this deal became even more noteworthy. The rumors of this large acquisition spread and were confirmed in just one day.

In addition to Johnson & Johnson being the focus, GSK and Eli Lilly undoubtedly also wanted to make early announcements. On Monday, GSK announced it would acquire gastrointestinal stromal tumor precision therapy company IDRx with a $1 billion upfront payment, while Eli Lilly announced it would acquire cancer startup Scorpion Therapeutics.

Such smaller-scale deals remain the mainstream at present. Even Johnson & Johnson, which has just made headlines, is busy clarifying to investors that such large-scale mergers are not the norm.

Several merger and acquisition deals on the first day gave some observers hope for a revival of M&A activity, and after the close on Monday, the XBI rebounded by about 2%.

At JPM, in addition to announcing the latest deals, many large companies also took the opportunity to provide a preliminary overview of their financial performance from the previous year. On the second day of the JPM conference, Eli Lilly's presentation was undoubtedly the focus, but the information revealed by this giant disappointed investors.

Eli Lilly expects its total revenue for 2024 to reach around $45 billion, although this figure represents a 32% increase over 2023, it is still $400 million lower than the lower end of the revenue guidance range provided in the third-quarter report released in October. As revenue data fell below investor expectations for the second consecutive time, Eli Lilly's stock price dropped nearly 7%, dragging down the stock prices of several other weight-loss drug companies. The market seems to have realized that while the markets for blockbuster drugs like Mounjaro and Zepbound are indeed growing rapidly, the growth rate is far from what was expected.

Eli Lilly CEO Dave Ricks certainly had to explain: "We are still in a relatively early stage; the first year of Zepbound's commercialization has just passed, and many things are happening that we have never seen at this scale or growth rate, making it difficult for forecasters to make predictions." He then emphasized that the annual revenue of the GLP-1 business is $25 billion, with a growth rate of 60%.

JPM is such a dramatic stage that receives countless attention and inquiries, and even the current most powerful pharmaceutical company in the U.S., at least the one with the highest market value, Eli Lilly, cannot escape.

By the close on Tuesday, the XBI biotechnology stock index fell more than 3%.

Looking back at the data from the past decade of JPM, the XBI index has averaged a 0.76% increase during the conference, with a median of 2.25%. In some good years, such as 2019, when Bristol-Myers Squibb announced the acquisition of Celgene, the XBI index surged by 7%. As of January 16, the day the JPM conference concluded, the XBI index was still down nearly 2%.

Main venue of JPM on January 13 / Photo provided by the interviewee

Foreign media summarized three main topics for this year's JPM agenda:The first is the intermittent market recovery; the good news is that a large amount of capital is flowing into new companies, while the bad news is that the funds flowing out through IPOs and transactions are much less; the other two main topics are the transition to Trump 2.0 and the evolving U.S.-China relations.They believe these will be key forces influencing the direction of the biopharmaceutical industry in 2025.

Industry experts are trying to assess the potential impact of the incoming Trump administration on the pharmaceutical industry, so at the JPM conference, everyone's attention is focused on the speeches of executives from major pharmaceutical companies.

On this issue, Pfizer CEO Albert Bourla's remarks are the most representative: "The new government may bring fundamental changes, which will come with risks and opportunities. For our industry, the risks outweigh the opportunities. Of course, there are others, including myself, who believe the opportunities outweigh the risks." He further explained, "The potential risks faced by pharmaceutical giants like Pfizer are likely to be offset by corresponding opportunities, especially since Trump is interested in innovations in cancer treatment."

Investment mogul Bob Nelsen, co-founder of ARCH Venture Partners, believes that the coming months under the Trump administration will be beneficial for the biopharmaceutical industry, reasoning that: "Throwing some stones and stirring the waters is definitely a good thing." But he added, "That doesn't mean there won't be many dramatic events, and perhaps some bad things will happen."
No one dares to speak with certainty. As the foreign media STAT summarized, "Too many of the most important decisions for the industry are not made in San Francisco, but in Washington, D.C. Regardless of whether everyone at JPM is showing positivity or negativity, most of them seem to be just waiting to see what will happen next."

On Monday night, JPM held various luxurious receptions as usual, featuring expensive drinks, discussions about science, and potential collaboration opportunities. However, behind all this, many attendees could feel that the tone of the industry was neither optimistic nor pessimistic, but neutral and low-key.

BD, M&A, or IPO? The heat is shared between China and the U.S.

The acquisitions of IDRx by GSK and Scorpion Therapeutics by Eli Lilly align with the trend of the past year: privately held biotech companies tend to prefer deals over IPOs.

Alexis Borisy, a venture capitalist at Curie.Bio, founder of IDRx, and board observer at Scorpion Therapeutics, stated that both companies secretly submitted plans for an IPO, and they were actually pursuing a "dual track of M&A / IPO," but ultimately chose to sell. He lamented, "If this were a thriving public market, IDRx and Scorpion Therapeutics might have gone public."

The weak IPO market has forced many mature startups to explore other strategic options. For Alexis Borisy, these two deals highlight the difficult choices faced by some startups preparing to go public. IDRx could have gone public because it has a drug for treating gastrointestinal cancer in early clinical trials with promising prospects, but its valuation is unlikely to be much higher than the valuation it received in its latest round of financing in August 2024. He said the company would have to sell about a third of its shares to raise hundreds of millions in an IPO, and it might also face the risk of a decrease in market value after going public.

In contrast, GSK provided a $1 billion advance payment for the entire company, enough for investors to see returns and for IDRx to continue advancing its pipeline.

Last year, the same was true for Promis. In 2023, Promis and BioNtech made two deals that resolved the company's cash flow issues for three years and also addressed the company's survival issues, but still needed to resolve the issue of investor exit. According to PharmaCube, Promis also explored the possibility of going public on NASDAQ but ultimately chose to be acquired by BioNtech.

In this regard, the biotech sectors in China and the U.S. can be said to share the same heat. However, domestic biotech companies still face uncertainties in China-U.S. relations, leading to fewer choices and often having to take detours.

The two deals involving GSK and Eli Lilly also continue another trend—large pharmaceutical companies are looking for cheap assets in less popular fields.

A report released during JPM by Ernst & Young shows that the number of biopharmaceutical M&A deals, measured in U.S. dollars, plummeted by 51% in 2024, from 186 in the previous year to 92. In fact, the largest M&A deal in 2024 was Vertex's acquisition of Alpine Immune Sciences for $4.9 billion; however, the number of biopharmaceutical BD deals increased by 17% year-on-year, from 81 in 2023 to 95 last year.

Subin Baral, global life sciences transaction leader at Ernst & Young, told GEN Edge that the situation in 2025 will be roughly the same, "There will be smaller, smarter deals."

Ernst & Young stated that the 25 largest biopharmaceutical companies invested $1.3 trillion in deal-making (which Ernst & Young refers to as "M&A firepower"). According to the 12th edition of Ernst & Young's annual M&A firepower report, this figure is down 5% from last year's $1.37 trillion and down 7% from the historical high of $1.427 trillion two years ago. "Broadly speaking, from the perspective of large biopharmaceutical companies, funding is not short. They are very active. They want to make deals, but they want to make the right deals."

Roche stated at JPM that it can deploy $10 billion in M&A firepower each year, but "it's not just about spending money," explained Roche CEO Teresa Graham, "If we find transformative assets that can complement our portfolio or significantly change the game in major disease areas outside of these focus areas, Roche is fully prepared to spend money."

In pursuing deals, large pharmaceutical companies are increasingly linking these deals to the therapeutic areas they are most interested in.

"What we keep hearing is, 'Is the therapeutic area we are pursuing deals in a strategic focus for us?' We will see more acquisitions targeting specific area assets," Subin Baral predicted. "After that, large pharmaceutical companies are likely to divest assets, or at least divest some assets that are no longer prioritized, and this trend will continue to develop."

Roche revealed that it recently conducted a rigorous evaluation of its internal pipeline and will interrupt about 30% of its pipeline.

The next "black swan" event.

A few years ago, Summit Therapeutics was looking for a cornerstone asset globally. After examining about 140 drugs, the company's executives focused on a cancer therapy discovered by CanSino. When the two parties reached a deal in December 2022, it hardly caused a stir and was even criticized by investors. "This is too boring; ivonescimab targets a set of boring targets—PD-1 and VEGF," recalled Summit Therapeutics' Chief Commercial and Strategy Officer Dave Gancarz at JPM.

But Summit believes in the potential of Ivonescimab. Last year, in a Phase III clinical study involving patients with non-small cell lung cancer, the bispecific antibody drug Ivonescimab outperformed Keytruda.Almost overnight, Summit's research results made drugs like Ivonescimab the next hot topic in the field of oncology.In this rapidly evolving race, Summit is currently in the lead, with several competitors already involved.

"This is indeed a 'black swan' event," said Summit's Chief Medical Officer Allan Yang, "and it is clearly something everyone is looking for."

Now the competitive pressure has arrived. Summit has begun multiple Phase III clinical trials, one of which will test whether ivonescimab can help patients live longer than Keytruda. Summit's competitors are also moving quickly.
Dave Gancarz said that Summit is closely monitoring emerging competition. But he pointed out that competitors face tougher challenges: modifying a drug that has already been "specially designed" is not easy. Therefore, Summit stated, "we still haven't found a drug better than ivonescimab."

The story of Summit and Kango is not over yet. Interestingly, as of the closing price on Monday, January 13, Moderna and Summit Therapeutics had roughly the same market capitalization, at $13.5 billion and $13.4 billion, respectively. On Monday, both biotech companies made consecutive appearances at the Westin Hotel, but Moderna, which has been in the global spotlight since the pandemic began in 2020, secured a larger banquet hall; while Summit, despite being one of the standout biotech companies of 2024, was only arranged in the much smaller Colonial Room.

The iterative changes in the industry are so rapid, and the JPM conference is an interesting stage where every pharmaceutical company must face the fast-changing situation. Pfizer's CEO Albert Bourla, who has experienced significant ups and downs over the past two years, should feel this deeply.

In 2023, Albert Bourla said at JPM that Pfizer had its most successful year in history; in 2024, Albert Bourla admitted, "2023 was a terrible year for investors." That year, Pfizer's stock price fell by 44%; this year, Albert Bourla believes investors have underestimated his company, reminding at a lunch on Monday, "Pfizer is the company that saved the world two years ago because we have excellent execution and scientific processes." However, investors' memories may not be that long, and this statement is more interpreted as Pfizer's counterattack after a difficult year.

Another interesting story is Amgen. In the investment bank TD Cowen's predicted list of potential "black swan" events for 2024, Amgen's GLP-1 drug MariTide is considered to have a 40% chance of defeating competitors Eli Lilly and Novo Nordisk.

Last year, Amgen's market value fluctuated by tens of billions of dollars due to this drug, and discussions about it almost dominated all of Amgen's investor conference calls. However, the Phase II clinical trial results of MariTide announced in November 2024 failed to convince Wall Street, leading analysts to question not only MariTide's potential but also whether Amgen had exaggerated the drug's prospects.

At a press conference on Tuesday, some executives from Amgen responded to this. They stated that Amgen is not hyping anything, "We will not make a big deal out of the data; this is a differentiated drug." Amgen's CFO Peter Griffith stated, "Many people are very focused on the complete Phase II study results coming this year, which will be presented at a medical conference, including results from another dose escalation study we are conducting." Peter Griffith repeatedly emphasized that the company believes in this pipeline.

These stories are a microcosm of the biopharmaceutical industry, where big pharmaceutical companies are looking for the next "black swan" event, searching for a game-changing drug, but where will the spotlight shine? Who will win and who will lose? Changes always come quickly.

China's innovation "overheating"

Unlike previous years, this year, founders, executives, and investors from Chinese innovative pharmaceutical companies received many positive signals before attending the conference in the United States.

Several cross-border transactions, such as those involving Shenda, Kanuoya, Zhengyi Pharmaceutical, and Bo, have allowed the domestic industry to feel the atmosphere of JPM in advance.

Some of the latest industry reports released before the conference also show positive numbers. Evaluate Pharma's latest report indicates that at least one-fifth of the projects in the entire industry's clinical pipeline involve Chinese companies; DealForma's data shows that about 31% of the innovative drug candidates introduced by large multinational pharmaceutical companies in 2024 come from China, compared to 0% in 2019.

Therefore, the number of domestic participants at JPM this year has reached a new peak.

Liu Tianran, a partner at Xiangfeng Capital, is not attending JPM for the first time. At the end of last year, Liu Tianran's investment in Chuangxiang Biotechnology had just announced a reverse merger with the Nasdaq-listed company Ikena Oncology, completing an oversubscribed private financing of $75 million. Additionally, the company he invested in, Baoyuan Pharmaceutical, was successfully acquired by Nasdaq-listed Nuvation, and Ruige Pharmaceutical's CDK molecule was acquired by Roche for an upfront payment of $850 million. She told Yao Medicine Cube, "This year's JPM conference is particularly lively, with a significant increase in the number of Chinese participants and a very active atmosphere. The main reason behind this is that cross-border transaction activities in the biopharmaceutical field were exceptionally active last year, and the scale of transactions also increased significantly. Many domestic companies have opened up new imaginative spaces through external licensing and Newco in the past year."

Cross-border transactions are becoming increasingly popular, directly reflected in the satellite meeting "BFC Medical Health International Business Cooperation Investment Seminar" held on the 12th. One participant learned that "in previous years, BFC could only finalize guest invitations a month in advance, but this year it was two months in advance, and inviting guests went very smoothly." It is understood that the number of participants at BFC has been increasing every year, and this year has already exceeded 1,000.

Domestic biotech executives who have already closed deals are familiar with JPM, while first-time attendees have more complex feelings. However, during these days at JPM, most people feel energized. Everyone is increasingly aware that JPM will set a tone and basic timeline for a year's BD work—if no deals are being discussed at JPM, it will be difficult to close deals this year.

People discussing cooperation can be seen everywhere on site / Image from Dr. Zheng Biao, CEO of Bangyao Biotechnology.

After returning from JPM last year, many domestic industry insiders were still hesitant to assert that "Chinese innovation has received widespread recognition." Some cautiously optimistic individuals believe that in the ADC field, overseas recognition of Chinese innovation has reached a watershed. They observed some obvious signals, such as Pfizer hosting a reception specifically called China Reception, expressing that "the internationalization of Chinese innovation may really be coming."

However, this year, the internationalization of Chinese innovation has become an undeniable fact.

Gilead's CFO Andy Dickinson's remarks at a press conference on Wednesday will certainly give more confidence to Chinese innovative pharmaceutical companies: "In the past five years, the assets flowing out of China have undergone significant and fundamental changes in breadth, depth, and quality.Because some management teams trained in the United States or other developed countries have returned to China. Ten years ago, what we saw in China were mostly follow-on drugs with little differentiation. The situation we see today is completely different—first-in-class, best-in-class."

The American media Endpoint summarized, "Last year, China's story was mainly about the biosafety legislation. This year's Chinese story will be about the explosive growth of high-quality, fast-follow assets, with well-funded startups and pharmaceutical companies seeking better deals acquiring these assets."

Previously, a founder of a domestic biotech company expressed to YaoYao, "Foreigners are all lamenting that the industry trends of the past two years are particularly suitable for 'Chinese-style innovation', improving next-generation therapies on already validated targets, with greater demands on execution, speed, and thoroughness than on pure innovation, which is something the Chinese are really strong at."

Endpoint even stated, "This trend could even disrupt existing venture capital concepts and how we evaluate innovation."

American peers have already felt a sense of crisis. Biopharma Dive reported that executives and investors interviewed by BioPharma Dive at JPM this week all agreed on one point, which is "Chinese biotech has raised the bar, forcing American companies to adapt to the new environment." They lamented, "Chinese innovation is appearing at our doorstep."‍

They believe that Kangfang's Ivonescimab is the best example. Compared to their American counterparts, Chinese companies are usually faster and have lower operational costs. Moreover, Chinese companies are pursuing solutions to more difficult 'engineering problems', such as manufacturing complex multifunctional antibody drugs or ADC drugs. They describe Chinese innovative drugs as "me too better", "fast-improving".

It can be said that Chinese innovative drugs have really "externalized" to the United States.