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Healthcare outlook hardened at Morgan Stanley’s 24th Annual Global Healthcare Conference in New York, where executives and payers said a steadier U.S. policy backdrop, faster Chinese biotech innovation, continued GLP-1 market expansion and AI-driven efficiency are the core drivers for 2026. Conference speakers named specific priorities: lower patient costs, measurable outcomes and industry stability from U.S. policymakers, plus rising cross-border partnerships with Chinese labs. The conference framing and quotes used here come from Morgan Stanley’s coverage of the event, as first reported by Morgan Stanley.
We expect faster passage of drugs to the market as an attempt to keep up with what's going on in China.
Sean Laaman, Head of U.S. Small- and Mid-Cap Biotech Equity Research at Morgan Stanley
Key takeaways
- Conference context: The discussion came at Morgan Stanley’s 24th Annual Global Healthcare Conference in New York and reflected views from roughly 3,000 investors and sector leaders.
- Medicare GLP-1 pilot: Medicare’s temporary July program for eligible Part D beneficiaries enrolled 6,000 participants in its first 60 days.
- Regulatory pace: Sean Laaman said regulators are likely to speed approvals to keep pace with China’s innovation.
- AI impact: Speakers said artificial intelligence is expected to shorten development timelines and reduce costs across clinical and commercial operations.
Table of contents
- Key takeaways
- Why executives say the outlook looks firmer in 2026
- China as both partner and competitor
- CMS priorities: measurable outcomes, affordability and predictability
- GLP-1s, utilization and the practical promise of AI
- Case for and against a sustained sector upswing
- What to be careful about
- Frequently asked questions
Why executives say the outlook looks firmer in 2026
Executives at Morgan Stanley’s conference described 2025 as cautious and said confidence has rebounded in 2026 because key U.S. policy uncertainties have eased. The commentariat at the event pointed to tangible policy moves on tariffs, vaccine guidance, international pricing and affordability that have reduced the perceived risk of a major industry disruption.
Two CMS directors, Dan Brillman and John Brooks, presented the agency’s agenda and framed it around stability and lower patient costs. They signalled support for value-based initiatives and for making plans compete on measurable health outcomes rather than on coding intensity. That signal, executives said, lowers the chance of abrupt regulatory shocks and encourages investment across biopharma, biotech and services.
Investors at the conference reported renewed interest across subsectors, from therapeutics to services and digital tools, with the general theme that clearer policy priorities make long-term capital allocation simpler.
China as both partner and competitor
Speakers emphasised that China has moved from fast follower to genuine innovator in biopharma and biotech, changing the strategic calculus for Western firms. Sean Laaman said the pace of Chinese innovation is a force the industry must match, and he argued that regulators in the U.S. are likely to accelerate approvals in response.
U.S. and European companies are increasingly seeking partnerships with Chinese labs to access novel biology and potential breakthrough molecules. Executives urged rigorous due diligence and guardrails to manage intellectual property and national security concerns before entering such collaborations.
The practical upshot for strategy teams is twofold: scout Chinese discovery at scale as a source of opportunity, and harden partnership agreements and compliance processes to limit downside risk.
CMS priorities: measurable outcomes, affordability and predictability
Dan Brillman and John Brooks set out CMS priorities that investors should factor into forecasts: lower patient costs, transparency, accountability and a more stable regulatory environment. They want managed care to succeed by competing on measurable health outcomes rather than documentation-driven coding intensity.
Brooks described a framework aimed at making plans “more predictable, more connected, easier to navigate and with higher accountability for results,” while Brillman stressed accuracy in risk adjustment as a means to restore confidence. Those remarks signal that CMS will favour policies and vendor offerings that make outcomes visible and auditable.
For commercial teams and strategy leads, that implies shifting product and contract design toward measurable endpoints and away from approaches that rely primarily on administrative coding to show value.
GLP-1s, utilization and the practical promise of AI
Executives said GLP-1 therapies continue to open new patient segments—obesity and diabetes treatments are bringing people into care rather than simply swapping existing users between products. Despite rapid adoption, speakers described current utilization as low relative to potential, and they identified Medicare access as a critical variable for broader uptake.
Medicare’s temporary July Part D program, which set a flat $50 monthly cost for specific weight-loss medications, enrolled 6,000 participants in its first 60 days. Conference participants said the pilot is a live test of how expanded coverage could scale demand.
Separately, artificial intelligence was presented as a multiplier for both R&D and operations: LLMs for information retrieval, AI agents for post-discharge follow-up and modelling that can shorten development timelines. Sean Laaman summarised the sentiment: “We expect faster passage of drugs to the market as an attempt to keep up with what's going on in China.”
| Topic | Primary drivers | Opportunity | Risk / Guardrails |
|---|---|---|---|
| China biotech | Rapid domestic investment and discovery | Partnerships that broaden pipelines | IP protection and national-security guardrails |
| U.S. policy (CMS) | Affordability, transparency, measurable outcomes | More predictable reimbursement and value-based contracts | Policy shifts that raise documentation transparency requirements |
| GLP-1 market | New patient demand and oral formulations | Expansion of obesity and diabetes care | Access limits; Medicare coverage decisions |
| AI in healthcare | LLMs, automation, post-discharge agents | Faster trials, lower commercial costs, better discovery | Data governance, validation and deployment safeguards |
Case for and against a sustained sector upswing
The case for
- Clearer CMS priorities and signals reduce policy tail risk and encourage investment in value-based models.
- Partnerships with Chinese labs expand discovery pipelines at lower cost and can accelerate time-to-market.
- AI applications in development and post-discharge care can cut timelines and operational costs, improving return on R&D spend.
The case against
- Partnerships with Chinese entities raise IP and national-security risks that could trigger regulatory pushback.
- Medicare access and payment decisions for GLP-1s remain unresolved beyond the July pilot, limiting predictable uptake.
- AI adoption requires robust validation and governance; failures or safety problems could slow regulatory acceptance and deployment.
What to be careful about
- Dependence on partnership models with Chinese organisations that require enhanced due diligence and contractual protections.
- Uncertainty over whether Medicare will move beyond the July Part D pilot, which so far covered 6,000 participants in the first 60 days.
- Operational and regulatory risk in deploying AI: validation, data governance and clinician acceptance could delay the claimed efficiency gains.
The bottom line
Conference participants presented a cautiously optimistic healthcare outlook: steadier U.S. policy, Chinese innovation as both an opportunity and a competitive pressure, ongoing GLP-1 market expansion and practical AI use cases that can compress timelines. The near-term path depends on two policy levers—Medicare coverage decisions for GLP-1s and how CMS implements value-based expectations—and on firms’ ability to structure partnerships with Chinese labs while protecting IP. Strategy teams should prioritise measurable outcomes, deal-level guardrails for cross-border collaboration and pilots that validate AI-driven workflows before scaling.
What to watch
- Watch for CMS decisions on whether the July Part D weight-loss medication pilot will be extended or expanded; no date has been set.
- Watch for announced partnerships or licensing deals between U.S./European firms and Chinese biotech labs; no date has been set.
- Watch for regulatory guidance or pilot programmes that explicitly accelerate approvals in response to China’s pace; no date has been set.
Frequently asked questions
What did CMS officials say about policy priorities?
Dan Brillman and John Brooks said CMS’s priorities are stability for the industry, lower patient costs, transparency, and accountability, and they signalled support for value-based initiatives that reward measurable health outcomes.
How large was Medicare’s GLP-1 pilot and what does it show?
Medicare launched a temporary July Part D program for specific weight-loss medications that enrolled 6,000 participants in its first 60 days, indicating initial demand but leaving longer-term coverage decisions undecided.
How will AI change drug development according to conference speakers?
Speakers said AI—including LLMs and specialized agents—can shorten development timelines and reduce costs across clinical and commercial operations, though no quantified savings were provided at the conference.
Related reading
This article is information, not financial advice. Anyone acting on it should do their own checks.
