The J.P. Morgan Healthcare Conference wrapped up last Thursday. Simply called “J.P. Morgan” to those in the life science industry, this is a highly-attended annual investor conference held in San Francisco every January.
Each year, there has been increasing criticism about the escalating costs of attending this conference. During the week of “J.P. Morgan,” room rates in San Francisco within walking distance of Union Square rise to $1000 per night.
In 2017, I attended and found this “bargain priced” hotel room for $300 per night.
There is ample press hype about the “frenzy” and the “mad house” of J.P. Morgan amidst “high energy networking events” and “swanky cocktail parties.” Interspersed within those reports are stories about conducting meetings over hotel lobby tables that cost $300 to rent, or going to a café to order “an obscenely overpriced avocado toast just to be able to have an introductory conversation.”
So, what really is all of this about at “J.P. Morgan”?
The actual conference is held at the Westin St. Francis Hotel, hosted by J.P. Morgan Chase & Co., the global investment and financial services firm. It is by invitation only to about 9,000 attendees. Lower tier companies are reported to pay thousands of dollars in fees to get into the conference. Over the course of four days, business leaders present their companies to investors and analysts.
There is no tradeshow floor.
With such a concentration of business executives, a large number of other events and conferences have scheduled themselves into event spaces throughout downtown San Francisco during this very same week. It is this congregation of activities that are also collectively referred to as “J.P. Morgan.”
As such, the event has evolved into a confab where the industry press goes to report on industry directions, where business development executives go to seek deals, and where companies at all investment stages go to seek investors and industry exposure.
A significant number of industry people are not even going to the actual conference at the Westin St. Francis Hotel, but to the many other myriad of events.
If you work on the business side, you would likely be attending “J.P. Morgan.” Others will ask “will you be at J.P. Morgan?” “Fear of missing out” (FOMO) may also compel attendance.
Meanwhile, attendees have results to achieve within an annual travel budget that can’t be dominated by the first event of the year.
Let’s approach this as a case study to bring some fresh insights to such an event and how to go about them in a better way.
The conference is at its heart, about showing investors the business potential of new healthcare technologies
Let’s start with the case facts.
Dennis Purcell was Managing Director of the Life Sciences Investment Banking Group at Hambrecht & Quist when this investment bank started this annual conference in 1983. He offers an excellent account of the conference history in Stat that I highly recommend reading. I highlight his key points:
In the 1980s, raising capital for the technology and biotechnology sectors was about to become a profitable line of business.
To help investors make sense of these new technologies, [investment banks] decided to start holding conferences to bring together the entire industry and the entire investor class. Hambrecht & Quist (later acquired by Chase Manhattan, a predecessor of J.P. Morgan) held its conference the first or second week of January in San Francisco. The first Hambrecht & Quist conference happened 37 years ago. It lasted half a day.
During the early years, our goal was to showcase up-and-coming companies — most of them biotechnology related — with cutting-edge technologies that would be transformative to patients. It gave investors in the space an early look at what biotechnology could achieve.
The smaller size made meetings longer, lasting at least an hour, and more meaningful. As the biotechnology industry began to explode, what started as an innovation conference whose primary mission was to make an impact on patients’ lives was now also becoming an investment conference.
We were beginning to hit the limit of 9,000 badges set by the St. Francis Hotel.
The conference grew more and more attractive for several reasons. First, we began to let only CEOs present, so investors could hear the story right from the top. Second, portfolio managers needed to rebalance their portfolios in the new year, and at the early January conference they could see all the companies in one place. We were able to highlight some of our private companies as ones that portfolio managers needed to pay attention to. Both VCs and IPO investors liked that. Third, securing a slot for a company presentation became harder and harder to do. The scarcity value of presenting company slots combined with hitting the limit of how many badges we could give out added cache.
And finally — I’m dating myself here — there were no iPhones, company websites, or Bloomberg terminals, and the internet was in its infancy. To get the information they needed, people had to go to the conference.
After J.P. Morgan acquired Hambrecht & Quist, things understandably changed in several ways. First, J.P. Morgan’s client base was of a larger size than Hambrecht & Quist’s, so many large-capitalization companies began to present at the J.P. Morgan Healthcare Conference. The company had a higher threshold for a transaction to make a difference, so it needed to gravitate toward larger players.
Second, the internet made it possible to learn about what CEOs were saying in real time without going to the conference. For some, the conference now comes to them.
Third, the dizzying number of meetings and presentations has made for less meaningful interactions. Fourth, although it took longer than I thought, the hotels, restaurants, and coffee shops have realized they have a monopoly during that week. They are using that power, to our collective dismay.
With transitions come opportunities. The Biotech Showcase, led by EBD Group and Demy-Colton, was one of the first to seize an opportunity. The showcase, now in its 11th year, reintroduced the idea that there was still demand to learn about the smaller public and private companies that will play major roles in the industry. This year it had 4,000 registrations, and more than 1,000 investors attended. The 15 to 20 “side conferences” at this year’s JPM also represent new opportunities. The topics included regenerative medicine, neuroscience, digital health, China, and more. I observed they were very well-run, had solid agendas, and offered ample time to network with leaders in those fields.
Both points of view — that JPM is diminished and that it is still going strong — are valid. For those who used the old H&Q conferences to dive deeply into issues, have meaningful conversations with colleagues, and engage in substantial back and forth with companies, it makes perfect sense that the current version of the conference isn’t satisfying.
At this year’s JPM, I spoke with a number of people who had come to the conference for a few years or less. Many told me that this is the only place where they feel part of a larger community that matters. They are still trying to find their footing, make contacts, learn about the scope of the industry, and more. The conference still works for these leaders of tomorrow.
The obvious answer is to have a strategic conference schedule for the entire year
The actual J.P. Morgan Healthcare conference is indeed suited for CEOs, CFOs, and investor relations executives, as well as for industry analysts and investors. The scope here is about investor relations, financing, and company M&A.
For business development professionals – and CEOs of startups and smaller companies also take on this role – it is the networking opportunities, side events, and parallel conferences that are sought. The scope here is about partnering: for licensing, transactions, sales, and acquisitions of products and services.
A conference strategy becomes easy by focusing on how each conference can provide for one or the other of these two distinct objectives.
To my knowledge, J.P. Morgan Chase & Co. produces the only major conference that provides for the former (investor relations & financing). In Canada, Bloom Burton runs a smaller investor conference focused on that geography.
BIO, EBD Group, Demy Colton, BioCentury, ChinaBio, OBN (UK), and Life Science Nation all run a number of conferences that are a combination of investor conference and partnering:
- Biotech Showcase (runs parallel to the J.P. Morgan Healthcare Conference)
- RESI Conference (runs parallel to the “J.P. Morgan” and to 5 other events listed below)
- BIO CEO & Investor Conference (New York in February)
- Bio-Europe Spring (different European cities in spring time)
- RESI Conference (runs parallel to Bio-Europe Spring)
- BioTrinity (London in April)
- Bio€quity Europe (different European cities in May)
- China Partnering Forum (different Chinese cities in spring time or later)
- BIO One-on-One Partnering (different US cities in summer time)
- RESI Conference (runs parallel to BIO)
- Bio-Europe (different European cities in fall time)
- BioPharm America (Boston in September)
- RESI Conference (runs parallel to Biotech week in Boston)
- BIO Investor Forum (San Francisco in October)
- RESI Conference (in Taiwan and Shanghai in November)
One’s conference strategy is then a matter of determining the appropriate ones and prioritizing them.
In addition to these, there are major meetings specific to each of the sub-industries. For example:
- AdvaMed’s MedTech Conference, for medical devices
- CPhI and DCAT, for pharmaceutical substances and chemicals
- HIMMS, for health IT
- Assembia, for specialty pharmacy
This list is as long as there are sub-industries. All these conferences are starting to include a partnering event, or if they have one already, they are expanding on it.
A better case study answer digs past the obvious answers
If there are so many investment conferences and business development conferences as alternatives, what exactly is the problem with “J.P. Morgan” or what it represents?
There are a lot of distracting case facts that can bog one down from coming to a good answer.
One example: the absurd imagery of well-dressed business professionals in the healthcare industry—an industry supposedly providing for the health and well-being of individuals—capable of spending thousands of dollars on hotel rooms, walking past homeless and drug-addicted human beings to get to their meetings and champagne parties.
This is a sad and serious socioeconomic problem, but it is one that has more to do with the problems of San Francisco itself. The excesses of the conference are amplifying this problem onto social media. That this problem is juxtaposed onto this particular conference and not onto any of the other many conferences hosted by San Francisco throughout the rest of the year is actually a symptom of a more fundamental challenge of the conference which we will get to in the final section.
Another example: for the last few years, post-conference reports and now even pre-conference reports suggest moving the conference to a cheaper city. The law of supply and demand suggest that if the city is overwhelmed by attendees, a shortage of space will drive up prices.
This proposal fails a simple analysis. The formal conference issues 9,000 badges. If the side events even match this number—and that’s a generous assumption—an attendance of 18,000 can easily be accommodated by the city. The Table below shows seven U.S. cities that usually host the major life science conventions. These typically bring 15,000 to 18,000 attendees. The conference infrastructure of San Francisco can easily handle this number, out-ranking Philadelphia, San Diego, and Boston. The price escalation confronting this event is not about the capacity of the city. This cost escalation reflects supply and demand imbalances for services to support activities that are misaligned with the central goals of the conference. Again, this is a symptom of a more fundamental challenge of the conference which we will get to in the final section.
A perspective from other industries as a signpost to the case study direction
The challenge of “J.P. Morgan” is not unique. Change is coming to all industries.
Let’s look at the luxury watch industry. This industry is dominated by Swiss watch companies that make mechanical watches. Examples of better-known brands include Omega, Rolex, TAG Heuer, IWC, Brietling, etc.
The two biggest watch events in the world are
- Baselworld, a trade show with an attendance of about 100,000 traditionally held every March in Basel, and
- SIHH, an invitation-only curated trade show traditionally held every January in Geneva with about 20,000 attendees.
Baselworld goes back to 1917. It grew consistently, up to a peak of 106,000 global visitors in 2017. As recently as 2013, its exhibition space had just completed a CHF 430 million expansion. Five years later, the survival of the show was in question.
In 2018, Swatch Group, the show’s largest exhibitor with over 17 of the world’s well-known watch brands, announced that it would no longer attend. This was just the most noticeable change that really started around 2008 when the show had its peak number of exhibitors. The desertion of exhibitors grew to almost 850 in just the two most recent years, culminating with the loss of Swatch Group, its anchor exhibitor.
By 2019 the reported changes were dramatic: the number of exhibitors was down to 520 from a peak of 2,087 in 2008, and visitors were down to 81,200, a 22% reduction from the prior year. About 100 smaller watch brands chose to exhibit away from the tradeshow itself, in the conference rooms of hotels instead. Swatch Group hosted its own parallel event in Zurich. Movado Group held a three-day summit for its 11 watch brands in Davos just before Baselworld.
For years, there were reports of complaints from exhibitors about rising hotel, food, and beverage prices. Does this sound similar to the J.P. Morgan event?
That same article goes on to state that “even on the retailer side, the relevance of Baselworld is shifting. A significant number of watch orders are placed even before landing in Switzerland – a phenomenon that started eight years ago. The purpose of Baselworld is now different, where trips to the show are given as an incentive to high performers in our sales team.”
A journalist specializing in the business of watches writes this analysis, which I also recommend reading. The key points are as follows:
Baselworld, like other trade shows, is being disrupted by technology. Digital has changed the game. Many brands no longer rely on the fair for sales. Orders and re-orders are done electronically. Big brands operate their own subsidiaries and retail stores in top markets; selling is done there. The business has changed. You don’t do business at Baselworld anymore. You are investing in your brand image. The show’s management were, in effect, asleep at the wheel. They should have seen the crisis coming.
Baselworld is now under new management, working on immediate and long term changes. Aside from providing better services and pricing to its paying exhibitors, the really important strategic changes are about addressing a world shifting to digital, and a world where distribution and business models are changing, as reported in horology websites Hodinkee and Quill & Pad:
- Baselworld’s B2B tradeshow model is introducing a B2C component to build a community that includes aficionados and collectors.
- The event itself will increase engagement with virtual and augmented reality, debates, talks, workshops and influencer events.
- Building a digital platform to connect the event and its brands to a worldwide audience year round.
SIHH is also reported to be changing to “align better with the needs of today’s public”. It will now be called “Watches and Wonders” with the series expanding to select cities worldwide. Before, it was by invitation only, and open to the public only on the last day. Now, admission will be open to all who pay the registration fee. It will expand its “LAB” showcase of new technologies. The goal is to reach new audiences and offer a concept that can translate to customers around the world.
The new direction that is instructive here is engaging with new audiences, particularly with the use of modern digital tools.
At a high level, the essence of what is changing is the same in Baselworld and “J.P. Morgan.” Raynald Aeschlimann, CEO of Omega, stated: “what made Baselworld special was the brands that occupied the halls, not the organisation or Basel. The whole concept of Baselworld is that it’s about the World of Brands. It’s not about Basel with brands. But the concept of meeting with everybody and having this kind of salon, I like it very much.” J.P. Morgan is the same in that it is about the companies that have something meaningful for the world, not the spectacle of the event itself, which encouraged all the excesses and the hype.
Wrapping up the case study
While there is a wide difference between luxury watches and healthcare, the conferences and events where industries conduct their business are changing in the same way, driven by the same forces.
Technology, digital platforms, and social media are changing how industry people connect, and in how companies communicate the messages that are most meaningful to the stakeholders, customers, and people they serve.
The new management of Baselworld emphasized these noteworthy metrics: “check the number of meetings you had, the number of customers you saw, how many influencers you received.” For retail consumer products, influencers represent an important new hub on a digital platform. They have high connectedness to consumer segments.
Influencers are, at its essence, people who are able to use a new platform effectively to communicate a compelling story to an audience.
Investment banks, such as J.P. Morgan Chase, are essentially institutional influencers with high connectedness to companies and investors. In the pre-digital days, they ran a conference to bring these groups together and provide a forum for companies to communicate compelling stories.
This venue still serves that purpose, but others are arising to do the same: BIO, EBD Group, Demy Colton, BioCentury, ChinaBio, OBN (UK), and Life Science Nation, to name a few, are one set.
This is really just the beginning. As the healthcare industry expands, branching into new sub-industries and new biotechnologies, there will be a need for other, new versions of “influencers” to help communicate compelling ideas and real-world results to investors and to communicate how this will have a meaningful impact on other important stakeholders. Unlike luxury watches, the digital platform will not be Instagram or Twitter. Other more appropriate platforms are required to engage broader audiences when it comes to the complexities of healthcare (as an example of what I mean, I suggested modelling & simulation and visualization in two previous posts, here and here).
The excesses that attached alongside the actual conferences, be it price gouging or other spectacles, are a distraction to the meaningful messages. Last year, we saw a pullback from these distractions at Baselworld. Last week, we also saw the same at “J.P. Morgan” with reports of reduced attendance and the acknowledgement that less is actually more by allowing investors and all other conference participants to focus on the information that really matters.
What is it that really matters, that companies need to communicate to investors, partners, and other stakeholders? A compelling story about strong science, breakthrough clinical results, a commercial premise that is sustainable, and how this all impacts real people.