A quiet JPM18? I don’t think so.
One thing I learned at JPM18 was that journalists see the world differently to me. There were multiple press reports that JPM18 was quiet, or as one journalist wrote on Twitter “it’s a bust”.
Don’t be deceived by the headline grabbers. I experienced the busiest JPM Annual Healthcare Conference ever – more people, more buzz and more deals. No surprise after 2017 saw new drug approvals by the FDA more than double from 2016 and 2018 could be even better. Also, the US government’s tax ‘amnesty’ is expected to kick-start the repatriation of profits held offshore which could trigger a huge wave of M&A across the industry. All of this gives me a lot of confidence about the year ahead in pharma and biotech, but is the US giving with one hand and taking away with another (see Medtech industry sector feedback below)?
We must maximise our talent
Throughout the week, there was one over-arching conversation about gender representation in our industry. I regard this as a big step forward. We can’t fix the problem until we acknowledge it and as Bill Gates famously said on a visit to Saudi Arabia “if you’re not fully utilising half the talent in the country, you’re not going to get too close to the top”. Compare this to the tech sector’s JPM-equivalent, CES which ran in Las Vegas at the same time as JPM – there were zero female keynotes. I know that there’s no room for complacency, but there is cause for hope that our industry’s direction of travel is at last heading the right way. White males don’t have a monopoly on talent, our focus should be on “building great teams around great science and everybody wins” as we heard from WuXi Apptec at its JPM18 global forum.
Reporting on the gender discussion has been widespread, so I won’t comment further here other than to say that we can and must do better. At The RSA Group, we’re committed both to internal diversity and to reflecting our belief in diversity in the candidates that we put forward to our clients. We know how powerful a force it can be in driving corporate performance – see our recent Talent Equity Report® on Biotech on exactly this topic.
US medtech’s pain could be Europe (and Asia’s?) gain
Now to the topic that worries me most. While US pharma is celebrating tax cuts, the US medtech industry is being heavily penalised under a trifecta of government taxation, healthcare service provider and regulatory pathway hurdles. 2018 could be the year when we see a migration of business and talent out of the US to Europe and Asia.
Possibly the most critical change from 2017 from 2018 is that all revenue, not just profit, is subject to 2.3% taxation. This effectively means young companies are being penalised from investing in their own growth and having to take on investment just to pay their tax bill each month. Before I moved to my career in executive search, I led a medtech company and know from that experience that revenues come before profit – now, thanks to this legislation in the US, taxes come before profit too. That is unsustainable and investors will move their money either to another sector or to another country.
Making the situation even more difficult, the consolidation of providers and the downward pressure on prices by healthcare providers like Walgreens is another reason to seek pastures new. We all know that FDA approval is key but as Camille Farhat, ex-CEO & President American Medical Systems AMS said, “with reimbursement and clinical adoption having increasingly higher hurdles compared to Europe and Asia, I expect a huge shift in 2018”.
Will this be Europe’s gain or will the industry shift to Asia, the modern home of industrialisation? American policymakers need to wake up and Europe needs to be on its toes, or the Asian tiger could swallow the lot.
If you’d like to hear more about what happened at JPM18, or find out how our successful and industry-leading Proof of Candidate® approach can help you, then contact me.