Investing in Healthcare
I just got accepted to my school's student-run investment fund to cover healthcare stocks, everything from pharma to med tech to hospitals etc.
I am actually interested in healthcare in the long term as well, and wanted to know if anyone had tips or resources for how to invest in this industry. I realize healthcare is really a catch-all term rather than industry so it can be tough to cover everything under healthcare.
Thanks
Pick a specific part of the industry, rather than focus on all aspects. Learn everything about that part of the industry. Figure out what the ACA will mean to it. This isn't super specific, but hopefully it will help keep you from trying to boil the ocean.
All i know is that it is a huge industry so be specific. Besides that I am also interested in healthcare investment
Agree with TechBanking. I think HC is probably one of the hardest industries to cover due to medical technicals for pharma and biomed/ devices. However, it is also one of the most interesting and fun to cover.
Last year at my internship, I covered a distressed pharma company and since such a large portion of their revenues rely on current and future patents/approvals, you will be learning a lot about substitute drugs and compounds which can get pretty technical (I haven't taken a bio class since HS), but is highly interesting.
All comments here have given some great information.
I agree that you want to figure out where you will focus, since different parts of healthcare have different levels of risk. You have clinical and FDA risk on the lifesciences / biopharma side, and you have various political factors affecting the services side. In the lifesciences world, there are established companies like ILMN who have significant product traction but room for additional upside through their pipeline products and growth in existing markets. In addition, many of the larger pharma companies are seeking growth through acquiring smaller biotech companies that are complementary to their existing product lines.
There are also much smaller companies that are still waiting for approval on their first product. Some people find these types of opportunities interesting, since you can profit heavily if the drug gets approved. Of course, the downside here is that you are taking binary risk, since an unfavorable FDA decision will tank the stock. I personally am too risk averse for these types of opportunities, but if you can develop an informed thesis as to why a certain drug will gain approval, or why the underlying technology may be of strategic interest to a large player, you can certainly earn a nice return.
To get yourself up to speed on the industry, I would recommend looking up the Deutsche Bank F.I.T.T. reports (I know they exist for various subverticals in services and biopharma). When I was in healthcare banking, these were helpful in learning about the industry. I also remember Piper Jaffray publishing some good material as well. You may have to go back a few years to find some of these, but they do a great job of explaining stuff in layman's terms. If I understood these without ever taking a biology class, I'm sure you will too
know everthing about the FDA process
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