The biotech industry is experiencing its worst hangover in years.

Last week, biopharma execs gathered at the annual JPMorgan healthcare conference — and the atmosphere reflected the industry’s mood.

Just how bad is it? Biotech investor Brad Loncar of Loncar Investments said last year was “the worst year from a stock market perspective” in his entire career (BBG).

Still recovering? Here’s a reminder of what the industry went through last year:

• Rising rates had an impact on nearly every industry — including biotech.
• The FDA is slowing down new approvals on the Accelerated Approval rogram — which is critical for drug development.
• Inflation Reduction Act: The new law will limit the amount by which companies can increase prices for specific drugs.

Biotech startups are running out of cash. Per BBG, 320 biotech companies had only enough cash left for one and a half years. Raise money or shut down. But investors are still keeping their pockets shut.

Wanna see a magic trick? For the past decade, the biotech industry has outperformed the S&P 500 by a wide margin.

Abracadabra… Biotech returns vanished, and industry benchmarks are back in line with the S&P 500.

Where there’s blood, there’s opportunity.

If interest rates were to fall this year or the next, the biotech industry could get a major boost.

• Since the biotech industry bottomed last May, it is up 35% while the S&P 500 has stayed flat.
• Cash-flushed pharma giants will eventually need to replenish their pipelines by acquiring smaller promising drug developers.

When they open up their wallets is the question.

Get Joe’d up: Rise in biotech mergers and acquisitions point to a bottom in the industry.