For many of the 300-plus companies presenting at this year's annual JP Morgan Healthcare Conference, it was all about communicating sustainability. But not the type of sustainability you would expect.
Rather than hit on the more traditional topics associated with sustainability such as energy consumption, supply chain management, or broader corporate social responsibility initiatives, these companies were trying to communicate a more urgent form of sustainability -- the sustainability or staying power of their business model. Companies ranging from mega caps to micro caps were focused on demonstrating to the more than 8,000 investors and potential partners in the audience that they had evolved to the ideal business model, which can deliver long-term value not just for investors but for all key stakeholder groups. This supports a recent healthcare market outlook survey conducted by Financial Dynamics, which showed that 98% of institutional investors believe R&D models for pharma companies need to change either moderately or significantly to address current market dynamics.
While many of the refined business models discussed at JP Morgan differed in tactical execution, there was a consistency in messaging across many of these presentations that addressed the need to drive innovation, right-size to improve efficiencies, adapt to changing market conditions, and expand into emerging markets for growth opportunities. The days of just showing up at the conference and presenting your standard corporate presentation are over.
A challenging economy has led to a greater responsibility for companies to communicate how they intend to deploy investors' capital. Whether it's through share buybacks, increased dividends, reinvestment in the pipeline, or strategic M&A activity, companies must spend more time than ever on messaging as it relates to their business strategies.
Importantly, stakeholders need to connect with that messaging not only on an intellectual level but also on an emotional one. This was evident through the numerous patient and societal anecdotes, which became part of what would normally have been financial- and numbers-laden presentations. Companies that made the extra effort to bring their business models to life seemed to impact audiences to a greater degree than those companies that chose a more traditional approach to telling their stories.
So what does this all mean for healthcare companies communicating in this new environment? As the industry continues to face challenges, whether patent cliffs, healthcare reform, or challenging regulatory environments, the need to demonstrate a sustainable business model that clearly articulates a company's value proposition is becoming a requirement, even in this high-risk, high-reward sector.
Ed Harnaga is head of healthcare and life sciences at Financial Dynamics.