J.P. Morgan Healthcare Conference

What to watch during health-care investing's biggest week of the year

Key Points
  • The J.P. Morgan Healthcare Conference gets underway as Celgene announces plans to buy Impact Biomedicines.
  • Investors are speculating that U.S. corporate tax reform will spur M&A. There also are questions about whether the industry's pricing practices will draw political fire.
  • Both issues will be among those discussed at the conference.
The 3 names to watch at JPMorgan's health care conference

The J.P. Morgan Healthcare Conference, the biggest week of the year for investors in the biotechnology sector, hadn't even officially started when word of a multibillion-dollar acquisition broke: Celgene is spending at least $1.1 billion, and potentially almost $6 billion more, to buy Impact Biomedicines.

That's business as usual for the summit, which draws thousands of investors, executives and analysts to San Francisco each January. More than 450 companies are scheduled to present at the conference, setting the stage for the year ahead.

On everyone's minds this week: Will the U.S. tax overhaul spur acquisitions? And will the president once again attack the industry for its pricing practices?

Sunday afternoon came news of the former: Celgene's acquisition of Impact Biomedicines, a private biotechnology company with an experimental medicine for the bone marrow disorder myelofibrosis. Celgene is paying $1.1 billion in cash, with almost $6 billion more if Impact meets certain regulatory and sales goals.

A deal to kick off the conference follows suit with previous years: in 2015, the weekend before the conference brought news of Shire's $5.2 billion acquisition of NPS Pharma; in 2016, Shire's $32 billion acquisition of Baxalta. And last year, the news held at least until the official start to the conference Monday morning: Takeda's $5.2 billion purchase of Ariad.

M&A isn't the only topic of discussion this week. The summit is also a key time for companies to report results and provide forecasts for the year ahead; already the weekend brought news from Exact Sciences, Alnylam and Sanofi. Analysts are also expecting updates early in the week from Regeneron, Vertex and Acorda, just a few among the onslaught that begins Monday morning.

Finally, investors are hoping the week remains quieter on at least one front: that of President Donald Trump. It was on the third day of the J.P. Morgan conference last year that Trump said in a speech that the pharmaceutical industry is "getting away with murder" when it comes to the prices of medicines, driving the IBB biotech ETF down almost 3 percent.

Despite Trump's rhetoric, and investor fears, 2017 brought little in the way of government action on drug prices, and biotech stocks, despite a rocky second half, ended the year up about 20 percent.