This week brings us the 32nd Annual JP Morgan Healthcare Conference in San Francisco, where a wide diversity of companies will showcase pivotal clinical trial results and key business developments to prospective investors.

Why does this conference matter to the average investor? If you are interested in health-care stocks, this is a seminal event because it's often accompanied by a sector wide rise in share prices. Not only do I believe this year will be no different, but the buying could be more frenzied than usual.

Why are buyers still hungry for health care stocks?

Personally, I find it rather surprising that the rumors ahead of the conference are so bullish in nature. The sector, in general, has already more than doubled in value over the last two years alone, and several individual stocks have blasted off into the stratosphere lately.

Yet, there are a couple of solid reasons behind this rosy outlook.

Buyouts are expected to be at record numbers in 2014

Firstly, the so-called 'patent cliff' is going to drive mergers and acquisitions this year, probably at record numbers. Top pharmas like Bristol-Myers Squibb (BMY 2.17%) and Merck (MRK 0.81%) have already openly  stated their intentions to make deals that will bolster their commercial and clinical pipelines this year. And I expect Pfizer (PFE) to be aggressive again this year in the buyout arena. In sum, mergers and acquisitions should help drive share price appreciation, as speculation runs rampant about the next buyout candidate.

The regulatory process is easing up for breakthrough therapies

Possibly one of the biggest causes of this sector's wide leap forward in value is the record number of approvals coming from the U.S. Food and Drug Administration, or FDA. Although the number of approvals slipped in 2013 compared to 2014, this drop was more of a function of fewer New Drug Applications than anything else. Drugs for diseases with no approved therapies or hard-to-treat diseases saw approvals come at the speed of greased lightning in 2013.

The FDA has long been criticized for holding up innovative new products for life-threatening diseases, and apparently the agency has finally heard the call. With the new 'breakthrough therapy' designation in place, you can expect even more drugs to come to market in record time this year.

Drugs for rare diseases that receive the agency's Orphan Drug Status have also been seeing approval times falling. Put simply, the FDA appears to be facilitating innovation these days, instead of hindering it. That's a welcome change, and helps to explain why so many companies are attracting new investors in droves.

New drugs are doing the unthinkable: curing diseases

One of the absolute coolest trends in the sector is the development of functional cures for nasty diseases like leukemia, hepatitis C, and liver disease. Drug companies are oft-panned in the popular media for developing drugs that do little more than alleviate symptoms, whereby creating repeat customers. And there is little doubt that chronic disease states that lack cures are by far the most profitable in the industry.

But this year marks a paradigm shift in the industry. Gilead Sciences' (GILD 3.18%) new orally administered hepatitis C drug, Sovaldi, had cure rates exceeding 90% in clinical trials, meaning the drug could go a long way toward eradicating the disease one day. Indeed, some patients suffering from the disease have reportedly put off treatment until now, hoping to try the new oral therapy. That's how much hope has been pinned on this new treatment option. So you should keep tabs on this compelling story this year. 

And unless you were hiding under a rock last week, the amazing story of Intercept Pharmaceuticals' (ICPT) experimental drug for liver disease being halted early in a mid-stage trial, because it was so effective, is yet another example of this promising trend. Intercept's fourfold increase in a single day sent shock waves through the sector, as investors seemingly bought any and every company researching liver disease drugs.

More broadly, I expect investors to be on the hunt this week for more game-changing drugs like Gilead and Intercept's, with the hopes of finding the next biopharma home run. 

Foolish final thoughts

The week ahead looks to be a good one in the health care sector. With buyouts looming, new drugs coming to market faster than ever before, and the industry serving up functional cures for devastating diseases, investor enthusiasm is at fever pitch. That said, you should be wary of the bloated market caps for many developmental stage biopharmas. And as always, you should keep value at the forefront of any buying decisions, no matter what the sector is doing in the short-term.