AMA: BB IBD Healthcare Analyst

Spent 3+ years in the healthcare coverage group at a BB in NY.

Would rather speak less about current / future aspirations and more about investment banking and healthcare, but please do ask away and I will answer as best I can.

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Comments (41)

May 20, 2017

What are the best things about working in a healthcare group? Is a science background helpful? Biggest challenges in future for healthcare?

Best Response
May 20, 2017
<span itemprop=name>Monkey2678</span>:

What are the best things about working in a healthcare group? Is a science background helpful? Biggest challenges in future for healthcare?

I really enjoyed working in healthcare -- given the complexities within each one of the three principal verticals (pharma, medtech, services), there's a lot to learn and even after my analyst program, I felt like there was a ton left more for me to learn.

One aspect in particular about pharma that I enjoyed is that the managers of the businesses seemingly act more like owners of a collection of assets, and as a result, there are very interesting transaction structures that are explored. I've worked on several interesting transaction structures including JVs (with a spectrum of financial, tax and governance consequences), royalty deals, assets swaps, spin-offs, etc. Even on pitches that were seemingly going nowhere, it's always very interesting thinking about how to inherently structure assets within a universe of pharma companies, vs. throwing two companies together to get a +5% accretion number.

A science background may be helpful, but there are only a handful of folks in the group have any science background. I don't think it helps very much outside of expressing interest. Clients hire us to provide valuation and capital markets expertise. On the pharma side, companies typically don't need help designing clinical trials on the pharma front, and on the medtech / services side, you're generally dealing with folks without a science background as well.

In terms of challenges for healthcare, I'm probably not the right person to ask given that I was just a lowly analyst, but there are a lot of fundamental business model changes and questions that have the industry in flux -- hospitals can't effectively make capex decisions without visibility on AHCA, drug pricing is still up in the air and some spec pharma companies that are levered and historically relied on price inflation are facing material challenges as a result, no one really knows whether PBMs hurt or help clients, etc. etc. Lots of evolving profit pools. All around, a ton going on.

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May 20, 2017

Thanks for the response. Hoping to get into a BB healthcare group, so this is very helpful, thanks!

Jun 21, 2017

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May 20, 2017
<span itemprop=name>Teller</span>:

How was your work split between the M&A group (assuming M&A wasn't all done in-house)?

A lot of our M&A was done in-house but often it depended on the client, M&A resources, whether the analyst on the account had proved competent. Giving a 3rd year analyst a $1bn buyside is a different conversation vs. having the 1st year on a $30bn sellside.

All pitches and strategic books were generally kept in-house and the conversation really only came up when there was a tangible transaction. On buysides and more 'strategic alternative' type of books, I'd usually express interest to my VP to keep modeling in my camp. On a sellside, there is nothing more I enjoyed than punting diligence logs to a 1st year M&A analyst.

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May 20, 2017

Not sure how much insight you have into this, as it is more in the realm of public policy, but what form of healthcare system do you think best balances the often conflicting priorities of Cost, Value, and Access?

Like the U.S. has pretty abysmal health outcomes given the amount of spending.

May 20, 2017
<span itemprop=name>WBI2994</span>:

Not sure how much insight you have into this, as it is more in the realm of public policy, but what form of healthcare system do you think best balances the often conflicting priorities of Cost, Value, and Access?

Like the U.S. has pretty abysmal health outcomes given the amount of spending.

Would rather not come across smug enough to have a view on the ideal healthcare system. But, I will say that you're right when you mention the health outcomes -- 17% of our GDP, approaching 20% is spent on healthcare. It's a very tough problem, and lots of people are very focused on it.

We're moving towards a value-based system based on outcomes and not volume. So what this means is a shift in profit pools for certain companies. For instance in pharma, companies that are developing oncology (cancer) drugs (Merck, BMS) are looking to be compensated by payors as a result of total costs saved to the system, vs. the cost of one specific drug. The same theme is occurring in MedTech to some extent.

Happy to also discuss healthcare access and the implications of the ACA / AHCA to healthcare companies broadly, but fear that this will turn into a political conversation instead of one focused on investment banking. On that note, one thing I wish we did more of on the job -- I didn't really see this happen at any level below MD -- is to really spend time thinking about how the political landscape will affect business models and highlight what that means for companies. We certainly put together thoughtpieces for clients but it was usually an MD drafting the bullets, with zero input from junior team, or an eager VP regurgitating equity research with zero insight of his own.

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May 20, 2017

From your general perspective, what banks do you consider strong in the healthcare industry both in BB/EB and MM?

On another note, what websites or resources do you use to keep up with market information in the industry?

May 20, 2017
<span itemprop=name>fratlax</span>:

From your general perspective, what banks do you consider strong in the healthcare industry both in BB/EB and MM?

On another note, what websites or resources do you use to keep up with market information in the industry?

This is purely anecdotal and based on activity I've observed, but believe the strongest groups are your usual suspects -- I've seen a lot of recent pharma activity from GS and Centerview. MS / CS have both historically been strong in healthcare services (MS has a couple of very quality healthcare service MDs and CS has a strong balance sheet / sponsor relationships -- sponsors are very active in services). I was on a few co-advisory mandates with BAML and believe their bench also runs deep (a lot of senior MDs). Can't speak to dealflow, but JPM has a massive healthcare team (believe the largest on the street).

For MM, RBC is surprisingly strong and has been hiring actively lately (at the senior levels) with very attractive comp packages. At my BB, we would bake off quite a bit for <$1bn sell sides and I think Jefferies would win the majority of mandates. They've just crafted out the $300mm-$700mm sell side space. I've also heard Houlihan crushes healthcare services (very strong in sell sides). Unfortunately don't have much visibility on the other folks, but I don't believe they are anywhere near as active as RBC / Jefferies / Houlihan.

Unfortunately I don't have more concrete views and again, the above is purely anecdotal. I'm sure some freshman is itching to throw healthcare league tables around.

In terms of following the industry, fierce pharma (wso won't let me post the link) is the only healthcare focused website / blog I know of -- I've been looking for more, but I think the resources we all know of (WSJ, Bloomberg, etc.) do a great job of covering the sector. As far as I know, there isn't much in the way of healthcare blogs like there is in TMT (The Verge, Engadget, etc.), but I would love if someone could prove me wrong (as I've been looking for a few for a while).

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May 21, 2017

Just to add to the list of healthcare sites: FierceBiotech, BioSpace, and Genomeweb are good resources as well

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Nov 27, 2017

Do you know how good Wells Fargo Securities is in the healthcare space?

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May 21, 2017

Can you speak to the overall culture of healthcare groups? Obviously each group/bank is different, but I hear that HC groups tend to be more on the sweatshop side, aside from a couple groups like GS HC. Has this been your experience as well (based on your relationships in the industry)? Thanks!

May 20, 2017
<span itemprop=name>IBY1229</span>:

Can you speak to the overall culture of healthcare groups? Obviously each group/bank is different, but I hear that HC groups tend to be more on the sweatshop side, aside from a couple groups like GS HC. Has this been your experience as well (based on your relationships in the industry)? Thanks!

Hmm, a bit tough to say but at the BB I worked at, healthcare was generally known as a laid back / tight knit group. I'd say we were, on average, working later than most groups in the bank (with M&A being a glaring exception) but the lack of BS work we had on our plates seemed much lower (esp when benchmarked against other coverage groups). There really was minimal facetime and generally great folks to work with, but unfortunately a deliverable is a deliverable, and healthcare is very active right now. My understanding was that healthcare at most banks is filled with pretty laid back folks, but I just wouldn't know so shouldn't be making blanket statements.

The only place I've heard of that is downright abusive is Lazard, but maybe that can be said about most groups at the firm. One of my closest friends used to work there and the number of post-3am'ers he pulled was absurd (including on weekend nights...). I also don't know of any one at a BB that has had to cancel a planned vacation but almost all of his vacations were blown up without much of an apology.

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May 21, 2017

Thanks - this was helpful!

May 21, 2017

Are you considering moving to healthcare PE? Why or why not?

May 20, 2017
<span itemprop=name>bballchamp2</span>:

Are you considering moving to healthcare PE? Why or why not?

In traditional / generalist PE now. I enjoyed pharma the most in healthcare, while hc services and medtech are the focus areas for PE funds. I just figured I'd have a lot more to learn with a generalist model and since I already somewhat understand the business models in hc services / medtech, I might benefit from learning about the economics of other business models. As much as I enjoy healthcare, I also don't know if I'm personally ready to be pigeonholed yet. I understand the argument of needing to specialize to succeed as an investor, but don't think there's a gun pointed at me to specialize at 25 years old.

May 21, 2017

Makes sense. I interned in healthcare PE and am now working in energy IB. I'm going to focus on generalist PE during recruiting but I was told that it is much easier to recruit for PE in the sector that you specialize in in IB.

May 21, 2017

Thanks for the AMA healthcarebanker.

Do you have any advice for a graduate who's joining a healthcare coverage group in the near future? Also would be interested to know the differences across regions (US/EU/Asia) in terms of deal flow, what types of transactions are most common, and exit opportunity to PE/HF.

Thanks again!

Observe. Learn. Share.

May 20, 2017
<span itemprop=name>KyloRen</span>:

Thanks for the AMA healthcarebanker.

Do you have any advice for a graduate who's joining a healthcare coverage group in the near future? Also would be interested to know the differences across regions (US/EU/Asia) in terms of deal flow, what types of transactions are most common, and exit opportunity to PE/HF.

Thanks again!

Sure, congrats on the offer.

Though I have zero visibility into Asia (don't know of any transaction our group has done that has involved Asia), our London team is fairly active with large cap EU pharma clients (Shire, Roche, GSK). Maybe this is particular to my BB, but the execution was actually fairly evenly split between London and NY. The way I've typically seen it work is that the bulk of the work is usually done wherever the MD with the relationship sits, but teams can request additional junior support as needed. With that being said, the London junior team never complained about a shortage of work, and I felt like their culture was typically less accommodating to our weekend policy, etc.

I'd say that when you start, aim to scope out the folks in your group you enjoy working with, and that will bring in deals. There is always the one vertical within a group that crushes it, and whether that's pharma / medtech / services, you want to align yourself with them and make sure you get some good deal experience. With that being said, at some point in your analyst career, you want to be exposed to all three verticals. Maybe this is just my experience, but I didn't learn a whole lot from my medtech staffings, since they were generally financings or vanilla M&A. I learned a ton from board presentations for pharma accounts, on the other hand. Also enjoyed the complexity of some of the business models in healthcare services.

One thing to note though is that medtech and some healthcare services (CROs for instance) accounts are most applicable to PE recruiting -- stable cash flow businesses, margin expansion stories, etc. etc. Pharma was great to learn from but probably more applicable to HF recruiting. I also found that the analysts that placed well in PE came in on day one, expressed interest in exclusively healthcare services / medtech staffings and had worked on enough sponsor-backed pitches / deals, that they could speak through them in detail throughout recruiting. They're also generally simpler business models to understand, so you can prep easier than the analyst who's struggling to understand the rationale for why the client sold a 20% royalty stream for the economics they decided on.

There were a couple of analysts that exited to HF, but these folks generally had a broad mix of transactions across verticals, really understood the space and generally ended up in pharma / life sciences focused roles. They were no doubt strong analysts, but if you're looking to exit to PE and recruiting kicks off in 6 months, might be imprudent to try being the hero that gets crushed constantly on strategic alternative board books for >$50bn pharma clients when other analysts are getting more looks from PE shops with $1bn HY financings on their resume.

And again, with all of that being said, you want to align yourself with the associates / VPs that are going to be working on live deals and are folks that you enjoy working with. They will ultimately be your references and beyond just recruiting, it just feels great and materially helps your analyst experience to work with guys you like and understand, and it's also nice being part of the guys in your group that bring in the revenues. Low chance everyone in your analyst class will announce a deal one year on the job, so to the extent you can maximize your chance to do so, will just be beneficial in every way (your learning / development, recruiting, ranking, bonus, etc.).

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May 21, 2017

Thanks man, appreciate the advice.

One follow-up question: how should a new-comer go about figuring out who is the guy that brings in deals and look out for his juniors? I presume that the junior people already working there might be the best ones to ask, but just not sure how to go about it without raising red flags.

Observe. Learn. Share.

May 22, 2017

Hi, thanks for the AMA post. I'm an international student (graduating senior) who's going to do either MSF/MA Econ next year. Does your bank/other BBs recruit international MSF students (sponsorships) ? If so, which department? My main focus in on ER, but I actually really want to break into IBD (I know that IBD is the hardest for international students).

Thanks a lot.

May 20, 2017
<span itemprop=name>iridescent007</span>:

Hi, thanks for the AMA post. I'm an international student (graduating senior) who's going to do either MSF/MA Econ next year. Does your bank/other BBs recruit international MSF students (sponsorships) ? If so, which department? My main focus in on ER, but I actually really want to break into IBD (I know that IBDis the hardest for international students).

Thanks a lot.

To be honest, I'm not the right person to ask, as my group had typically very standard backgrounds. If what you're saying is true, maybe you can start in ER and move to IBD? I know most BBs are very open to having people move around between divisions (particularly S&T / IBD / ER) and especially between analyst / associate.

Also, might be worth keeping an open mind. I didn't think there was anything else in the world but banking but looking back, I think I would have likely enjoyed ER a ton more than banking.

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May 22, 2017

Hello Healthcarebanker!

What does AMA stand for... it seems like we ask questions and you answer, which is very nice!

I'm currently a consultant looking to transition into banking. I saw quite a few openings in healthcare and I was interested to apply. I previously worked with a lot with process improvements as a result of the ACA, and my past project was for a pharmaceuticals client.

I am wondering if this is something I should mention as I do believe I have pretty good industry knowledge - but of course my work has all been very post-deals / strategy + implementation.

Thank you,

BSP!

BSP

May 20, 2017
<span itemprop=name>BlueSweetPretzels</span>:

Hello Healthcarebanker!

What does AMA stand for... it seems like we ask questions and you answer, which is very nice!

I'm currently a consultant looking to transition into banking. I saw quite a few openings in healthcare and I was interested to apply. I previously worked with a lot with process improvements as a result of the ACA, and my past project was for a pharmaceuticals client.

I am wondering if this is something I should mention as I do believe I have pretty good industry knowledge - but of course my work has all been very post-deals / strategy + implementation.

Thank you,

BSP!

AMA stands for ask me anything :)

Sounds like that would be very helpful to mention. I don't think anyone in my group could give you examples of appropriate process improvements as a result of the ACA, so you'd definitely stand out.

Good luck with the transition.

May 22, 2017

Thank you :)

BSP

May 22, 2017

I don't think this is the right information. You will have trouble transitioning to healthcare banking as a healthcare consultant with a focus on process improvement. It's helpful to have a some understanding of the healthcare field, but to make the easier switch into banking from consulting, you need to have more transactional or corp fin experience (think MBB / maybe EY TAS). It also depends on the level you are as a consultant because the bank won't know where to place you level wise. The best bet would be to go to Bschool and transition into banking and through the process let banks know you're interested in healthcare b/c of your past healthcare work experience. Feel free to DM me for more specifics.

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May 22, 2017

What's your background in? How did you get into Healthcare?

May 20, 2017
<span itemprop=name>Keyser Soze 123</span>:

What's your background in? How did you get into Healthcare?

Business undergrad. Had zero visibility into healthcare banking but thought it might be cool to learn something new, but above all, it was mostly because the guys in the group all seemed like caring and quality folks.

May 22, 2017

That's pretty similar to how I chose my department. I studied bio preMed and currently work in a Boutique IB. I get staffed on occasional Healthcare deals because of my background, despite working in Food & Beverage.
Two more questions:

Would you recommend seeking employment at a BB? Do you find that you're given a good amount of responsibility on each deal? I'm afraid I would be a glorified excel / research monkey if I laterally moved.

Also curious to hear what your take is on the new GOP healthcare bill and its repercussions as well. I'm vastly over simplifying things, but from what I've heard people expect it to increase cost of Healthcare in the industry causing more conservative spending, and a mild slow down. Thoughts?

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May 20, 2017

Hi, I really appreciate the last post on the landscape of the healthcare banking teams covering the industry. As an incoming summer intern for a healthcare group, what would you recommend the best way for interns to add value to the healthcare team? What do you expect on a day to day basis and what's the deciding factor that he/she has earned the full time offer? Both as an summer analyst/associate and would love to hear any personal experiences.

May 22, 2017

What is the sexiest rectal thermometer model?

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May 22, 2017
  1. Are there any actual people with medical experience in your group (MD)?
  2. If there aren't, could you see someone with with medical experience adding a lot of value to your group (I'm currently in the process of apply to medical school, but I majored in finance and am potentially am looking at going into IB)?

Thanks in advance.

May 24, 2017

Thanks for doing this AMA!

I'll be working in the finance division for one of the large pharma companies this summer, but I'll also have just finished my economics undergrad from a target. I'm looking to try and leverage this experience to transition to a healthcare coverage group - do you have any experience working with people with this background or whether working in pharma will help in any way in getting interviews?

May 27, 2017

Thanks for doing this OP.

Do you feel that any clients of potential clients may look down upon those without any science education (ie just being a finance or business major)?

Also, did you just acquaint yourself with the jargon and methodology of some of the more simple drug processes while on the job and from experience?

May 27, 2017

In HC here too. OP will you ever buy a generic drug knowing how shady these pharma execs are now? :)

May 27, 2017

What multiples do physiotherapy clinics trade at? Im considering buying one with ~500k EBITDA for ~800k EV.