I am interested in getting some information on the healthcare investment banking. I have read some of the other posts and found out names of some of the players, but have not found anything that could give me extensive info on industry background. Any books or online literature you can recommend? I am interested in finding out if this is best way for me to combine my Life Science/Medical background with an interest in banking. I have taken basic finance courses: intro, one on strategy etc. What is the job market like especially for those looking to just start out in the industry as intern/analysts.
Breaking Into Healthcare Investment Banking
HC investment banking is almost always a good branch of investment banking to be in considering the fact that there is constant innovation and start-ups in this space that will be acquired by the large cap health care companies. Additionally, it is a business in which scale matters in order to fund R&D so acquisitions to develop scale will frequently be in the best interest of businesses regardless of the M&A environment.
Healthcare is, and will continue to be a great industry to cover. It makes up a gigantic portion of the GDP, and some sub-sector is always rolling-up. Tons of deals, especially because the government cant make up its mind on how it wants to do reimbursements, or what sorts of laws it wants to pass that will reform the entire industry.
There's a lot of downward pricing pressure, and there will continue to be as long as the government & MCOs run the show. It's gonna be a booming market for many years to come as providers attempt to cut costs by consolidating, and as med device companies try to invent more efficient/cheaper ways to deliver the same services.
Read some industry reports from Moody's or S&P. They're pretty all-encompassing. Many larger schools have access to these industry reports. Alternatively, read initiating reports from the big banks. Try to find an initiating report for one of the major players in each sub-sector of healthcare. I would definitely focus on big pharma, MCOs, Med devices, and clinical testing if you are just starting out.
User @deal_mkr, an investment banking analyst, shared details about the different industries that fall within HC IB:
Healthcare is generally broken down like this:
- Medical technology / Equipment (J&J)
- Pharmaceuticals, which is further broken down into more mature companies with a wide portfolio of marketed drugs (Pfizer) and smaller biotech companies which may be listed publicly and have 9-figure valuations based solely on a product in clinical trials, despite no revenue. These smaller companies generally look to get acquired or license their product to one of the big boys, and these licensing deals can run into the hundreds of millions of dollars, even before the product is approved. Therefore there is always lots of deal activity in this sector.
- Medical Services (Hospitals)
Out of these Pharma/Life Sciences is the most niche-y -
Read an analyst report on a life-science company and it will be unlike an analyst report for a more conventional company - lots of detailed far out revenue projections broken down by product and detail on clinical trials, usually written by guys with PhD's.
Additionally, there is very little debt financing for many of these companies so the models will not include big debt schedules and you can forget about LBOs
Healthcare IBanking Recruitment
I work at a pretty decently recognized HC bank on the street and in terms of analysts...we generally care more about general intelligence whether it be in finance specifically or in pharma. One of the analysts here has no finance background but has a science background from school and he's doing great. I'm the complete opposite, no science background at all and pure finance and i'm doing aight.
In terms of the degree, it's not impossible but we focus our recruiting efforts generally where the analysts graduated from. So this fall, i'll be going back to my alma mater for recruiting and likewise for the other analysts. Not to say we don't consider other schools outright but our initial outreach is limited by resources. If we consider a candidate from a diff school its usually through a referral or a client reaching out or just cold calling.
Read More About Healthcare Banking on WSO
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