What a Difference a Year Makes: Three Observations from the JPM Healthcare Conference
Hotel room rates in San Francisco have resumed being just expensive, not uber-expensive. Union Square is crowded, not overflowing. Sports talk in bars and restaurants is more likely to be about real football – the Super Bowl, Monday morning quarterbacks, watching from the sidelines, dropping the ball – than borrowed football metaphors to describe business deals and the stock market.
What’s changed? The annual JP Morgan (client) Healthcare Conference has ended. CEOs of biotechnology companies, investment bankers, venture capitalists – and yes, public relations practitioners – have exited San Francisco. Those who attended or observed from afar left with more than business cards or a stack of news coverage to read. They departed with a particular sentiment and mood. It can be summarized in five words.
This year will be different.
Not necessarily in a good way. What a change from 2015, when I wrote about a mood of pure optimism, meaningful innovation and boundless partnerships.
This year the mood is best described as one of pessimism and worry. Those feelings are tied to significant, tangible challenges the health industry faces in 2016. Many will argue the industry has created those challenges through a mix of its own fantastic financial success and not listening to the undercurrents now on the surface.
The result is what we at FleishmanHillard would call an Authenticity Gap – the space between what brands (in the case, companies) say about themselves versus what other stakeholders say about that brand based on their own experiences and perceptions. Authenticity is tied to three pillars – society outcomes, customer benefits, and management behavior.
Here are three key themes from the meeting, and my take on what this means for 2016. Viewed through the lens of authenticity, it’s clear that the health industry has work to do.
Past Success Creates Sky-High Expectations
In the last five years, the Nasdaq Biotechnology Index more than tripled returns in the S&P 500. And last year alone, the FDA approved 45 new therapies, its most since 1996. Many of those were therapies with billions of dollars in revenue. With results like that, it’s hard to go up, at least financially? On the opening day of the conference, the index fell 3.4 percent.
What it means: Pharmaceutical and biotechnology companies need to reconsider their corporate narratives this year. A dose of calculated, not unbridled, optimism will help, along with a focus on reminding stakeholders of the promise of R&D and the long-term nature of drug discovery.
A Lack of Hard News Creates Different Storylines
A lack of business deals at the conference shifted conversations (see the word cloud below). A case in point: Bloomberg reported on an investor event (not hosted by JPM) put together by a financial communications firm to highlight the lack of women attending the conference. While the authors used this one event and non-scientific observation, it ignited an important conversation. It also article kicked off significant social media conversation and spread quickly across the internet, getting picked up by financial sites Dealbreaker and consumer news sources like Jezebel.
What it means: The lack of diversity in biotechnology investment was not caused by JPM, and this particular news event is, sadly, not going to cause much immediate change. Still, we do hope leaders at all organizations realize that diversity creates healthier workplaces and show more rapid, tangible progress.
U.S. Drug Pricing is the 500-pound Gorilla. The Gorilla is Hungry
When journalists ask every single CEO for a viewpoint on pricing, it’s clear the issue isn’t going anywhere. Yet some CEOs did themselves no favors with their answers. One company’s CEO even called the public anger directed at drug companies as “an abomination.”
What it means: Companies must be willing to increase their transparency around drug pricing and recast the economic benefits these medicines provide. The emotion that people have for their health is fundamental to who they are, and when medicines that could help them are out of reach, their frustration is understandable. At the same time, the drug industry has always been unfairly maligned despite creating medicines that are changing the lives of millions of people around the world. They’ll need to show stakeholders – patients, governments, health care professionals – a new definition of value.
This year, perhaps more than ever, we’re excited to help companies close their Authenticity Gaps. Can the industry really have its customers feel the same way about innovation as they do? How can customer care really improve? And will leadership do right and communicate credibly? We can’t wait to see.
Mike Devine, Joe Crapotta and Alex Alvarez contributed to this post.