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A Tale Of Two Industries

Jamie Dimon
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Jamie Dimon

Yesterday during his lunchtime keynote speech here at the JPMorgan Healthcare Conference JPM Chairman and CEO Jamie Dimon was asked to give his worst-case scenario for the economy. He said that'd be a 1982-type recession lasting about two years and with unemployment "North of 10 percent." Dimon said it would be "Irrational to not be prepared for that."

A common refrain in investment circles is that healthcare is recession-proof.

It's less economy-related than it is fundamentals-related, but today comes word out of our partners at "The Wall Street Journal" that Pfizer is planning to lay off 800 researchers.

But the contrast between the downsizing in big pharma and the picture in the upstart biotech sector can be striking.

This morning while killing time before my live interview with Vertex Pharmaceuticals CEO Joshua Boger, he told me that his company took in 11,000 applications last year for 300 positions. "It's tougher than getting into Harvard," said Boger whose company is headquartered in Harvard's home town of Cambridge, MA. And VRTX, which is ramping up for its hepatitis C drug, is still hiring a few people a week.

It's an anecdote. It doesn't mean that biotech is immune from the troubles plaguing the economy, the drug sector and the markets. A lot of money-losing biotechs with no products on the market can't access the capital markets right now. And that's forcing many of them to better conserve what little cash they have on hand. That can mean layoffs and scuttling of earlier stage research and development projects.

The Biotechnology Industry Organization says that's putting innovation at risk and is calling for a federal tax break for baby biotechs that aren't making money. Jamie Dimon doesn't like that idea. In response to a question about it yesterday he said gesturing with one arm and then the other—and I'm paraphrasing a wee bit—"If something stupid happens over here, why would you do something stupid over there?" The audience laughed.

    • Drugmaker Pfizer Cutting up to 800 Jobs

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