Investment Banking Healthcare
Hi all. Interviewing for a senior analyst (2nd year) IB role in Healthcare at BB US bank in the UK, and I was curious if anyone could advise on the usual interview process, modelling tests, and general Healthcare specific questions or resources that I should look into. To mention that this is an internal move as I am currently a junior underwriter in the commercial banking team of this bank. Thanks!
Be familiar with subsets of hc and where they sit Some banks are strong in Pharmaceuticals, other in MedTech etc. if they do pharma, understand if it is generics or spec pharma or biotech and so on. Understand banking and have good reasons as to why healthcare. They care about the passion and you should be able to speak about at least one sub-sector. It’s also fun because most things will be new to you even after years in the field. Why banking is also very important - exciting to join strong team where deals just seem to come through, less pitches and more actual work. Be able to speak about some trends and know your technicals cold!!!!!!!! Important to prove your work ethic - healthcare can sometimes have longer hours because of the niche work that’s done. For example, screening for rare diseases as M&A opportunities. That takes more time than general screening for Enterprise Software or whatever…
Thank you for the reply. What specifically should I look into for the technical part? Any idea on what type of modelling tests might in such a process?
Which bank?
First you need to understand what the positioning of this team is.
Is this a top 3 BB? Something else?
Do they cover all segments? Be also mindful that mot all segments have the same potential in Europe.
In short:
- big pharma is largest fee opportunity but most likely driven by “supermarket bank offering”. So coverage for the likes of GSK, Novo, Bayer, Novartis will include countless pitches with the help of the Us biotech team, and the fees will probably come from core banking relationship (DCM, treasury services…) with the occasional ECM/M&A opportunity
- biotech coverage is largely driven by ECM opportunity but EU capital markets are not good for biotech, so ultimately it relies on strength of US ECM biotech franchise. Not a lot of sell-sides or buy-sides in Europe and it’s very competitive for m&a. But would expect coverage of companies like Genmav, Zealand Pharma, etc
- spec pharma is where the high yield & lbo activity is. Or was. Every PE has a platform now, some have paid a lot. There will be exits at some point (see Galderma IPO this year), but a lot of these businesses are on the Continent. So strength of Continental Europe is critical (you don't get on Sanofi's OTC spin-off without being tier 1 or BNP). PE generates work and fees but boutiques are fighting hard on those too (Rothschild), as well as mid market (Jefferies for example)
- medtech in Europe is all about smaller, private companies. Smith & Nephew and Convatec do one small deal every 3 years, and audio companies are all continent based and super consolidated. will look like a mix of big cap coverage (DCM fees?), ECM (sponsor exit), and very occasional
m&a opportunities (but some mid marketd do well there too) and some of the deals are sub BB size
- patient care: lots of damage jn the past 2 years. sector was overlevered and the premise of "infra-like" hasn't lived well through the test of inflation I think (turns out that governments don't want to increase reimbursement when costs go up). lots of PE assets of various sizes but with various issues. some are highly consolidated with not a lot of growth opportunity (vets?). but new pockets come up to (IVF clinics recently). will be substantial financing opportunity at a good BB, but also potential legacy issues on the books.
- life sciences tools / reagents and diagnostics: a few local companies with mix of listed / private. sector is super US driven so expect Us colleagues to pitch m&a. large cap will be Roche Dx or Siemens healthineers. small innovative companies that every one and their mother tries to fight on too. good PE activity, high valuations tied to growth.
The bigger the bank, the more likely you end up touching all of these. Tier 2 will be selective and not do everything (hard to pitch ECM to biotechs without a real platform in the US, eg DB).
There are some good people everywhere, and some to avoid too.
In terms of things to look at:
- pharma is the obvious one. get your hands on the 2012 deutsche bank pharma primer to see what drug development process looks like. if you have access to equity research, try to find some goos long report about some of the larger companies out there. Drug valuation is all about dcf, indication, sales potential and probability of success.
- LBO technicals and some understanding of credit analysis can really help if your bank plays in high yield financing. A few years back I was spending an awful amount of time working with my credit colleagues to help them get comfortable about risks of the sector. bonus point when you need to explain European generics market trends to a risk officer who has been burnt by the US generics meltdown of 2015-2016.
- if your bank dabbles in ECM, it's worth doing a bit of a refresher here (how does an IPO work in UK vs US, what's the difference between a PIPE and an accelerated placing, when is convertible relevant, etc).
What do you mean in regards to US DB Healthcare here? You don’t see them on biotech IPO/follow ons really but would it still be a better place to be compared to joint book runner MM shops like OpCo/RJ//Stifel?
Need to be careful here.
You go to DB in London if you want 1) big bank experience with balance sheet and multi-product offering, 2) work on large cap coverage as well as sponsor-intensive sectors, and 3) generalist-exposed ecm work in Europe.
If you really want to do biotech work in London, there are other places to do so. Frankly, if you want to do biotech ECM, the location is the US anyway.
The places you mentioned are marginal for healthcare in London.
For a first year analyst, DB healthcare would still be a good entry point into the sector. Will certainly provide some dealflow, learning the ropes of IB, and opportunities to move later.
So Even DB as a BB is tier 2? What would you consider tier 1 and tier 2 for healthcare in europe?
Tier 1:
- JPM, MS, GS, BAML. Citi not far
- Lazard, Evercore. Rothschild and jefferies for mid cap / LBOs (Jefferies also good for biotech ECM but very US driven)
Tier 2:
- barclays, DB, UBS.
- greenhill, Moelis (Moelis has been doing really well for a couple of years but their team head just left to join GS). HL is doing well in the lower mid market (no pharma coverage), and a couple of other boutiques cover the same segment but I’m less familiar with them.
I must be missing some, but everything else would be tier 3.
Does it mean that starting somewhere else is a no-go? Not necessarily, but super dependent on 1 banker. Piper has good senior people for example, and regularly work on interesting deals, but very small team. Some of the weakest names can be good to start and tend to be “vacuumed” by the better brands when markets heat up and junior build up is needed.
this is great stuff
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