hey WSOers, just seeking some advice if there was an "updated" guide around the basic multiples and healthcare specific IB knowledge that would be helpful for interviews? Especially around biopharma and providers.
Any resources you all would recommend?
thank you
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Can you be more specific? When you say providers, I'm assuming you mean healthcare providers? Biopharma includes biotech, medical devices and pharma. These are basically three distinct fields. Even with pharma, you have generic, brand and specialty. There's also payers and wholesalers, each of which are distinct from biopharma and providers.
I can help with generic and brand pharma if you have targeted questions.
hey thank you. I just wanted to know how do they do valuations for biotech companies with no CFs? Also where can I find some uptodate multiples (What multiples are used for biotech comapnies and what do the ranges look like for say EV/EBITDA, etc...) thankyou
You could use forward multiples (ex. EV/peak sales)
They'll do a bottom-up, product level build-up for the the portfolio. If a company has a single product in development, pre-clinical for example, they'll estimate total targetable patient population, dose regimen, price per dose regimen, IP exclusivity period, length of approval and development period, COGS per dose (API + conversion cost) and then OPEX (distribution fees, sales and marketing expenses based on personal promotion required to drive uptake, manufacturing costs, regulatory and development costs, etc.). The uptake (how quickly the product acquires share) is usually based on analogs of similar products (same therapeutic area with aligned formulation and channel mix).
It's easy to run a DCF once you have the forecasts. In-development products are usually probability adjusted (cash flow weightings) to account for regulatory and technical uncertainty (non-market risk).
You can also value an early-stage, pre-revenue biotech company if they had a recent round of financing. It's a bit technical, but you model the cap structure and rights/preferences of each tranche and then "back solve" the implied price of the company based on the recent round of financing.
Very simple example: Company sells 1x share at $10. There are 100 shares, thus equity value is $1,000. Obviously, things get more complicated with participating/non-participating preferred, convertibles, options, warrants, etc.
Check Mergers and Inquisitions, always a good starting place, sell side handbook too
I remember there was a very good article about Healthcare group in IB where the guy talked about the differences of Healthcare with the other industries, look at past posts and you will find it!
https://www.wallstreetoasis.com/forums/biotech-finance-from-ib-to-vc-hf…
here is the link
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