DURHAM – In the equity markets, healthcare mirrored the broader market in the final fiscal quarter for 2018, with some volatility and underperformance. But have no fear. As a whole, it’s the top-performing sector the past year.
That’s according to Peter Meath, J.P. Morgan’s managing director industry head of Life Sciences.
“Broadly, it’s a very positive sentiment these days, even given some 4Q volatility,” he told WRAL TechWire.
“The public and private capital markets are extremely receptive to the space, and the pace of technological innovation has never been higher.”
Last Thursday night, Meath appeared on a panel, presenting highlights from J.P. Morgan’s 2019 Healthcare Conference, along with the trends shaping the industry. It was all part of LaunchBios’s Better Than Life Science series on Thursday night.
According to the company’s latest stats, healthcare IPOs represented 41 percent of total new issuances last year – the highest of any sector. Technology was second at 31 percent.
There were 64 IPOs in healthcare, up from 34 in 2017 — nearly double. The same goes for dollars raised.
“There was quite a bit of sub-sector diversity, with interesting gains in MedTech and LST/Tools/Dx in particular,” said Meath told a 150-strong crowd at The Chesterfield. “The market window has certainly been open,” said Meath.
‘Mega deals” rule in 2017
Tackling other trends, he said 2018 was a positive on the venture capital front, with investments in life science companies nearly doubling from 2017.
Among the highlights: a marked increase in “mega deals” ($50MM+), which grew from 73 in 2017 to 145 in 2018 — the highest total on record, he said.
“We’re seeing more investors in the space, and also more investors from ‘non-traditional’ areas such as Corporate Venture Capital, Health System investing and Family Office investing,” he said.
As for startups, there’s still a focus on platform technology, especially IO and gene therapy, he said.
“In MedTech, noninvasive tools and AI/data-informatics driven TDx is getting quite a lot of attention,” he said. “The IPO increasingly shows that the public market is accepting earlier stages of companies, with preclinical and Phase I-II companies going public with greater receptivity.”
So what should we keep our eye on?
“One area that’s getting a lot of buzz (and capital) is AI/machine learning-driven life science companies in both the drug and device space,” said Meath, who has written on these trends here and here.
“This is everything from platform companies using AI for novel drug discovery/development, to Medtech integration of data analytics (everything from wearables to diagnostics) and also AI’s use in areas like Clinical Trial management and Patient Recruitment/Engagement.
“It seems to be changing the way we view how drugs and devices can be developed, advanced through clinical phases and ultimately brought to market.”
People will continue to talk about cost and pricing pressures, he added, especially entering into an election-cycle year.
“Pharma seems to be realigning portfolios around both core competencies and also pricing concerns.” He said. “It’s certainly worth keeping an eye on, though sentiment is that nothing imminent or immediate seems to be on the horizon.