Healthcare Banking Overview

palma's picture
Rank: Senior Chimp | 24

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.

Cries - Asset Management Vice President:

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:

deal_mkr - Investment Banking Analyst:

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

thatch:

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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Comments (88)

Aug 14, 2011

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Aug 14, 2011

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Aug 14, 2011

I am also very interested in this.

Aug 14, 2011

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. Its 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.

    • 1
Aug 15, 2011

The life sciences VC/PE/merchant bank Burrill & Co. has a blogish thing. Not in healthcare, so I don't know if it's quality or not.

http://www.burrillreport.com/

Aug 16, 2011

So far I have only managed to find tidbits of info and looked into the profiles of some of the key players and recent developments. One thing that has come over and over by at least reading the threads is that it seems that by choosing to pursue this field you risk getting pigeon holed and would have a hard time transferring to other areas of banking due to a narrow exposure. Do you think this is entirely true? Not that I think that is very likely to happen because my interest is certainly here, but would it make it impossible to switch in the future?

Also, what is the compensation in healthcare based on? I mean I am sure it is the usual base salary + performance based bonuses like other areas, but are they prone to frequent fluctuations like the industry itself? In general what could someone starting out expect in terms of pay and what potential is there for growth. Is it on par with other operations that banking focuses on? I am really interested in heathcare innovation, med devices and LIFE SCIENCES in general so I think I would really like this field, but I feel quite uncertain not knowing what I am going to get myself into.

If I have completed a Life Sciences degree and introductory finance courses, how far away am I from being prepared to apply for summer internships? Do I have to take more advanced courses? Do most College students apply only after Junior Year?

Aug 17, 2011
palma:

So far I have only managed to find tidbits of info and looked into the profiles of some of the key players and recent developments. One thing that has come over and over by at least reading the threads is that it seems that by choosing to pursue this field you risk getting pigeon holed and would have a hard time transferring to other areas of banking due to a narrow exposure. Do you think this is entirely true? Not that I think that is very likely to happen because my interest is certainly here, but would it make it impossible to switch in the future?

Also, what is the compensation in healthcare based on? I mean I am sure it is the usual base salary + performance based bonuses like other areas, but are they prone to frequent fluctuations like the industry itself? In general what could someone starting out expect in terms of pay and what potential is there for growth. Is it on par with other operations that banking focuses on? I am really interested in heathcare innovation, med devices and LIFE SCIENCES in general so I think I would really like this field, but I feel quite uncertain not knowing what I am going to get myself into.

If I have completed a Life Sciences degree and introductory finance courses, how far away am I from being prepared to apply for summer internships? Do I have to take more advanced courses? Do most College students apply only after Junior Year?

Healthcare generally has a beta <1 so I don't think you'd have the concern of losing your bonus due to it being a cyclical industry.

Aug 17, 2011

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

I dont have much experience with the other two sectors

Def interested in hearing others' perspectives on the space

Aug 17, 2011
  • Pigeonholing is subjective: obviously a REIB guy will know more about REITs than you do. but you'll likely know more about your chemical compounds than he does. Needless to say, Healthcare IB is like another language, which based on your LS background you seem equipped to understand how things come together.
  • Job market will always be there: healthcare affects everyone. I couldn't give 2 shits if I didn't shop for clothes in a year. But I'd be worried if I couldn't get my prescriptions filled out.
  • VCs are a good path if you're thinking 'exit opps' and really want to dig into these kinds of companies.
Aug 17, 2011

All that makes the sector seem very interesting to work in acutally. I just read my last post and realized that I just fired away with questions one after another...guess I should have asked them in pieces. In any case, I am thinking about the possibility of appyling for a summer position as an analyst because I guess right now there are probably no analyst positions out there? I looked at the career section of a couple of different HC focused firms and for starting analyst positions they don't require a lot of previous finance experience so it might be good for me since I have none. Do you think I would stand a chance of landing a position like this next summer if I have a 3.9 GPA in my UG Life Sci degree + fin courses. Also, just to throw a curveball...I am from the socialist-rye sipping-bacon perfecting-hockey worshipping-frozen landmass just above y'all. Does that make a difference when applying to the US? If it helps my degree is from a school targetted by most big IBs: Queen's University (still you may not have heard of it). For now, what do you think I should be looking into to help solidify my resume, do more fin courses or land a job on the business side of Pharma?

Aug 17, 2011
palma:

Does that make a difference when applying to the US? If it helps my degree is from a school targetted by most big IBs: Queen's University (still you may not have heard of it). For now, what do you think I should be looking into to help solidify my resume, do more fin courses or land a job on the business side of Pharma?

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 bkground but has a science bkground from school and he's doing great. im the complete opposite, no science bkground 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 dont 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.

feel free to PM if you have any qs.

Aug 17, 2011

@ Palma:

  1. Your entire school is not a target. The Commerce program at your school is a target. And only the top 5 % of the program will end up in IB.
  2. It is not targeted by "most IBs". It is only targeted by GS in NY (which takes anywhere from 0 to 5, depending on the year). The rest of the IBs that target it are Canadian.

@ Everyone else:

How much of an advantage is it to have a science background for HC IB. Is it even an advantage?

Aug 17, 2011
seedy underbelly:

@ Palma:

  1. Your entire school is not a target. The Commerce program at your school is a target. And only the top 5 % of the program will end up in IB.
  2. It is not targeted by "most IBs". It is only targeted by GS in NY (which takes anywhere from 0 to 5, depending on the year). The rest of the IBs that target it are Canadian.

@ Everyone else:

How much of an advantage is it to have a science background for HC IB. Is it even an advantage?

Well, I guess it is as target as a Canadian school can be. I don't know which banks recruit from Commerce these days, but as early as 2008, I remember seeing recruiters on campus from the different banks as well as info sessions. Although, some of them were for Canadian offices of American Banks. I am guessing a LS/HC background is probably not the end all be all advantge, but it gives you a little bit more to talk about in the interview when they ask "Why healthcare?" and it is a smaller learning curve in getting to know the products (HC innovation vary so greatly and paradigm shifts take place all the time in the science). Finally, if you have a passion for the industry that might make ones work more interesting. Those are my guesses...

Though, I think it is just as important to shine in Fin courses as well...because I don't think I would consider banking in general if I did not do well in them despite my LS background.

Aug 18, 2011

PM Me

Aug 18, 2011

Ah the long awaited one...yessir! I was also wondering, being clueless, if right now is the time to apply for analyst positions for the coming year or summer? It seems a couple of people have posted about interviews etc. at the firms I am interested in.

Aug 18, 2011

There are actually relatively few people in healthcare investment banking that have healthcare backgrounds, especially at the junior level. Healthcare experience is really only a secondary factor, if at all. The best way to break into healthcare investment banking is to have the right skills and aptitude for corporate finance and investment banking itself, not healthcare.

My advice would be to go to business school, as it is extremely difficult to lateral from outside the industry. Once you are in the recruiting process for internships and focused on IBD recruiting, THEN you can convey that healthcare is your "first choice" coverage group.

Aug 18, 2011

I wonder if venture capital / PE firms with a health care / pharma focus might be interested in your background.

Aug 18, 2011

Thanks for the answers So what would you advise me to do with the education? Master in Management at HEC Paris, or maybe Master in Finance at University Saint Gallen? Or na MBA (although i don't know whether I am qualified for that with 2 years of work)

Aug 18, 2011

I am not too familiar with those other degrees, but think you would be at a severe disadvantage going into recruiting if your primary focus was investment banking. I'm sure it's possible but likely an uphill battle. Fact of the matter is that most banks simply focus their associate recruiting on MBA programs and do not have a process in place for other masters' degrees.

Aug 18, 2011

What about a master in management?

Aug 18, 2011

@MD8, so in your opinion is it better to get a a 2 years MBA or 1 year?

Aug 18, 2011

Can really only speak for banking in the US, but in that case you would need to do a 2 year MBA in order to do an internship.

Aug 18, 2011

You could see the following:
http://www.waldenmed.com/home.asp

Aug 18, 2011

thanks... anybody else?

Aug 18, 2011

Try fiercebiotech http://www.fiercebiotech.com/ .
The top part of the page has links to fiercepharma and other sister websites that cover a specific subsector of healthcare. It's kinda like dealbook for the biotech/pharma/medtech sectors

Aug 18, 2011

medpac.gov

Best Response
Aug 18, 2011

Health Care banking can be split simply into two categories: Services and Life Sciences (some may argue that Managed Care deserves it's own split, but I guess technically it's a service provided).

Services include hospitals, assisted living / skilled nursing facilities, HC IT, healthcare staffing, CROs/CMOs, labs, managed care, equipment suppliers, distribution, etc. These companies tend to have capital structures which allow them to take on sizable amounts of debt and on the whole the clients are much bigger companies. Their financial statements look very similar to every others (with the exception Managed Care, which look similar to FIG companies). However, for facility-based companies with heavy proprietary real-estate assets, you may use EBITDAR instead of EBITDA (and subsequent ratios such as Adj. Debt / EBITDAR, etc.).

Life Sciences companies include big pharma, biopharma, biotech, medical devices, diagnostics - basically anything requiring heavy R&D expenditures that don't provide a service. These companies can be big (GSK, Wyeth, Teva, Forest Labs, Abbott, Stryker) or tiny start-ups. The bigger companies typically need the same investment banking products as any other large, publicly traded corporation. The smaller companies tend to focus on equity products - namely, going public.

A hard science background is not needed for health care banking. Unlike a group like Consumer or Industrial, you won't see a ton of bankers jumping ship to be researchers or vice versa (although by nature of interest, more people with hard science backgrounds tend to be interested in health care, but not many). Bankers are purely there for financial expertise and execution, rarely do they provide any product advice to the clients. Usually the clients they are speaking to have hard science backgrounds and could run circles around the bankers. That doesn't mean the bankers don't do their best to understand the products and the science behind them, but they don't fool themselves into thinking they are going to provide value to specific company about the products themselves. It's more high level - i.e. "your company has a product that is going off patent soon, generics will be squeezing any margins you may have, why don't you acquire another smaller company that's currently in Phase III with a similar Hepatitus C drug" etc.

Maybe when I have more time and it's not nearing the end of a long and hungover Friday that I'll go into my 5-10 year view of the health care industry, but hopefully that helps. If you have an interest in health care, don't let the rumors about the hours scare you off. I think you should put personal interest and cultural fit first when choosing a group.

    • 4
Aug 18, 2011

I'd be interested to see that 5-10 year view.

Aug 18, 2011

Great summary from GameTheory - a couple other things I'd point out on healthcare:

-As he alluded to, you will tend to gain more "finance" exposure in terms of modeling if you work in healthcare services but you will gain more "market" knowledge if you do life sciences because you work with a lot of tiny startups and big companies looking to acquire tiny startups.

Of course, with current market conditions there aren't too many debt deals/LBOs going on, so who knows how true this generalization is currently. Just my observation from some healthcare IB friends over the past few years and what they learned in different groups.

-A lot of people on this board have asked about "recession-resistant" groups, and I think healthcare is at or near the top of that list. Perhaps life sciences are more risky, but healthcare services are needed regardless of what the economy is like or how many writedowns banks report.

You're unlikely to see many mega-LBO deals like HCA over the next several years, but I'd say overall dealflow in healthcare will probably be stronger than in higher "recession-beta" sectors like consumer/retail.

-Although you don't need a hard science background to do it, I think having some kind of background or showing a strong interest definitely gives you an advantage. That was my experience when interviewing for various industry groups 2 years ago anyway.

If you had done business development at Genentech for a few years and then did a finance MBA, for example, that would be great positioning for healthcare IB.

But if you haven't, that's fine too - just make sure you have some compelling reasons for why you want to do it.

I do not work in healthcare IB so not sure what the best source of info. is on related deals, but I would imagine the same sources as for other industries (The Deal, WSJ etc.).

Aug 18, 2011

GameTheory I would love to hear the 5-10 as well

    • 1
Aug 18, 2011

Sounds pretty interesting, if you could find the time I would like to hear it as well.

Aug 18, 2011

Thanks for all the info guys, I appreciate it. I definitely think Healthcare is a group I will push for during FT recruiting.

And GameTheory, add me to the group that would love to hear your thoughts on the sector over the next few years.

Aug 18, 2011
SBE:

And GameTheory, add me to the group that would love to hear your thoughts on the sector over the next few years.

Ditto

Aug 18, 2011

every time i see this at the top of the recent posts i think that gametheory responded!

    • 1
Aug 18, 2011

I doubt my response is anywhere near as earth shattering as you guys may be hoping for. Everyone is aware of the macro factors that are driving the proliferation of the health care industry these days - things like the aging population of the United States, rising health care costs, and up until recently, the reimbursement environment.

Obviously what happens with the much of the services industry is highly dependent on what happens come November. For those of you unfamiliar with the government reimbursement situation in the 90's, the Cost Plus system that the government had adopted to reimburse Medicare, Medicaid, etc. (that is, using a flat reimbursement rate program across the board), allowed many otherwise inefficiently run sectors (i.e. nursing homes, hospitals - anyone with large amounts of government reimbursement risk) to thrive relatively easily. Once the government switched to the PPO system of reimbursement, which changed the levels of reimbursement by level of acuity and complexity of care, there was a tough transition period while inefficiently run organizations either died off or evolved rapidly. It's easy to note that while this claimed the lives of many large, publicly traded health care companies and put many of the healthiest companies on life support, the administration at the time (Bill Clinton) did nothing to from a government standpoint to ease the transition period. It's ironic that organizations like the SEIU are deathly afraid of private equity buyers in the nursing home space (putting images of our nations' poor elderly being put out on the streets) but it was our own administration that did the most damage to the industry in the late 90's early 2000's, but I digress...

Looking into the future it's clear that reimbursement rates are getting cut and will continue to see a decline. It will be interesting to see how the Democrats deal with the funding of government reimbursement programs in the face of implementing universal health care. There is already an active shift of several at-risk facility based companies to pursue a better "payor mix" - that is, more private pay and gov't reimbursement per patient base - with an emphasis on private pay backed patients and an emphasis on adding higher acuity care to capture higher reimbursement. It's hard to see this sector as the crown jewel it once was for leveraged buy-outs, especially with most private equity firms (including mine) shunning all reimbursement risk (the days of playing the arb card of system inefficiencies are over). The big business of utilizing the real estate assets of facility-based companies by layering on CMBS is, for the time being worse-off than even the traditional credit markets. I don't think anyone wants to be touching any pre-packaged, ratings-traunched real-estate products for some time...

The managed care sector will obviously be the most affected come November and beyond. Assuming the proper implementation of a universal health care system that provides adequate care for all who choose to use it (at great cost to the average American taxpayer, no less) will, no doubt be earth-shattering to the larger managed care players. Personally, it's difficult for me to see an easy way to provide universal health care in a legal environment that comes just short of encouraging frivolous medical malpractice lawsuits by rewarding plaintiffs with outsized damages. From a banking perspective, it's difficult to get M&A work out of these companies as they do much of the smaller acquisitions in-house. Most of what you'll see from them is larger follow-on offerings and debt offerings. In the instance of the impending Wellcare acquisition by Humana or United, you'll find there is seldom any loyalty to any firm when you're that big - expect large bake-off processes.

One area which I think there's always upside for is PBMs and other drug distributors. Brand name or generic, there will always be a need for large distribution players. While there is much threat from overseas (namely China and India), until people can get comfortable with their quality control and regulatory environment I think you'll see a good amount of dominance in the U.S. Unfortunately it's hard to see much M&A in the sector as there are really only 3 or 4 major players - although I do think many are looking to move downstream and acquire large retailers and pharmacies.

As far as the life sciences go, it's interesting to see how much of a roller coaster ride it's been for biotech in the equity markets. They come in and out of favor - lately it seems that people have been looking for good biotech plays but none have been able to have enormous amounts of success (except of course, the U.S. listed or dual listed China IPOs). Of course, less access to public markets will make them cheaper targets for bigger corporations. As far as the macro environment goes, however, if you have a good product and the ability to find funding there's always some sort of liquidity event out there, whether it be public filing or acquisition by one of the hungrier, bigger pharma or biopharma companies that need to keep their pipelines alive and their stock prices up.

As it pertains to banking, I see quite a bit of growth in places like Brazil, where universal health care is simply not working and large managed care players are catching all of the fallout from those who can afford private health care plans. You'll see many IPOs coming from that market alone. China and India as global suppliers, manufacturers, and eventually research and development in the long term. Health care staffing is another interesting sector to watch that has been able to weather the economic storm thus far, anyways - there continues to be high demand for qualified health care professionals. Also, I'm somewhat bullish on specialty off-site treatment centers. Radiation therapy centers, kidney dialysis centers - anything that makes treating a debilitating condition without making the patient drive for hours. Low cap-ex (the equipment is usually leased) and most of the centers are privately run - consolidation is obviously a major factor here. I'm keeping an eye on the RTSX/Vestar buyout.

Aug 18, 2011

As a former Healthcare IB analysts, I agree with Game Theory's sentiment on HC.

I covered the HC Services sector with a heavy emphasis on hospitals, home nursing, hospice, respiratory therapy, durable medical equipment and HCIT.

Understanding the dynamics of the healthcare industry can give you a headache at times as there are many moving parts...CMS reimbursement rates, annual gov't regulations, various compliance measures, etc.

Although time will tell how HC will evolve after November, the industry will continue to grow as the aging population and life expectancy continues to increase. The services sector is highly fragmented. Although the M&A market may be slowing down somewhat, I believe there exist significant opportunities for consilidation in HC services.

Aug 18, 2011

good thread, thanks guys!

Aug 18, 2011

Hmmm. Interesting perspective Game Theory... particularly interesting to read that you are bullish on specialty off-site treatment centers. I will disagree with you.

I've been working on an analysis of multi-facility dialysis treatment centers and most of them are simply NOT profitable. We're more often concluding on a fair value based on net fixed assets vs. cash flows. Sure, capex is low... what does equipment cost on average? Oh I'd say a typical dialysis machine is about $18K. Leased? Yes. But so what. In spite of the low overhead, simply put, cash flows are not there unless the facility is lucky enough to be run by a Medical Director or Medical Group who has a big following in the area or who is closely connected to a local hospital and thereby is a rainmaker with patients. The reality is that more often than not and dependent ofcourse on geography, most of these types of "off-site" facilities are cannibalized by competition, most have negative margins, most are operated below capacity and most have challenged patient mix profiles. I would not be bullish.

Just my 2 cents...

Aug 18, 2011

Definitely agree with your analysis aadpepsi. I guess maybe since I added it in as a last minute thought I didn't expound on why I think it's a good play. When I said "most are privately owned" I didn't mean that as a good thing. I meant the industry is fractured and a consolidation play is key, there are doctors by profession who aren't businessmen by training running these centers inefficiently (and we all love inefficiency). Maybe they have the ability to drive traffic to their sites through their relationships with mid-sized regional hospitals and the like, but like you said, probably not. Where the upside comes is a regional or even national player snapping up selective sites in good locations and utilizing their existing relationship network to drive traffic and kill off any stragglers that are poorly run (not from a medical standpoint, but from a business standpoint). Many doctors who have partnerships and have small local chains of off-site treatment centers are heavily invested on a personal level and are always looking for the next liquidity event. And oftentimes the price they will exit for they measure in terms of absolute dollars and not necessarily IRR or however else we may look at it. Or, if it makes sense (or the leases are unfavorable), build de novo locations to compete with existing facilities.

From a concept standpoint, it makes perfect sense, however. A patient who needs dialysis will need it for the rest of his or her life, or until a kidney transplant is received. Radiation therapy obviously has less gaurunteed recurring cashflow (patients who need radiation therapy will either move to chemo or go into remission) but with the general trend of cancer rates and subsequent treatment increasing, it makes sense. The alternative being a mid-sized regional hospital, which can result in long waits and long drives, neither of which is desirable to the patient if it can be avoided.

Aug 18, 2011

yeah, does anyone have any sources on healthcare investment banking?

thanks

Aug 18, 2011

Healthcare has been huge this year - make sure you know all about the tax inversion large pharma deals that happened or were attempted earlier this year. Can't point you to any specific websites, sorry.

Aug 18, 2011
Jun 22, 2018

Anybody got any reading suggestions for somebody trying to specialize in healthcare IB? ie - any books that you think help gain industry expertise?

Jun 22, 2018

There's been a lot of deal making over the last year or so (Valeant recently buying Salix comes to mind). Some high profile deals have also fallen through e.g. Abbvie/Shire and Pfizer/Astrazeneca.

It's currently quite a "hot" industry as far as I'm aware.

Jun 22, 2018

Very arguably the most active sector currently.

Jun 22, 2018

It appears to be the most active sector along with to TMT right now. There have been 38 major M&A deals so far this year in Healthcare to go through and that doesn't count deals that never went through or smaller deals. But the deal volume in healthcare is expected to stay the same or even pickup during Q3 and Q4.

Google "healthcare m&a deals 2015" there are some good lists of all the M&A action related to Healthcare this year and in the past.

Jun 22, 2018

As everyone has said, HC is probably the most active sector in M&A, and has been for the past 2 years. I'll give you a quick overview of the sectors and the activity in them.

Pharma:
Very active, showing no signs of slowing down. Notable big pharma deals in the past year include Endo/Par, Valeant/Salix, Pfizer/Hospira, Actavis/Allergan. Not to mention the ongoing takeover situations with Teva/Mylan/Perrigo. Plus there are still a good number of mid-sized players in spec pharma that could get swallowed up.

Medical Devices/Tools:
Big players are consolidating, but there's not a lot of room left for big deals. Notable deals in the past year include Danaher/Pall, Becton Dickinson/Carefusion, Medtronic/Covidien, Zimmer/Biomet, Wright/Tornier. The space will probably stay hot between the midcap and smaller players, but the influx of big deals in the past year means that we probably won't see as many big deals in medtech space in the near future.

Biotech:
Less active in M&A, but very active in equity markets. But still a lot of notable deals, including: Alexion/Synageva, Abbvie/Pharmacyclics, Teva/Auspex. Biotech is richly valued right now, so we might not see as much M&A activity in the near future, since most of the big pharma guys won't want to shell out a ton of dough for a single marketed drug.

HC Services:
This is a broad space, but it has been hot for a while now too. Recently we saw CVS/Omnicare, United/Catamaran, Tenet/USPI, and a lot of activity by mid-sized players. Also continuing to see a good amount of equity raises. Yesterday we saw the rumor about Humana's potential sale, so it wouldn't be surprising to see another huge Services deal in the next few weeks.

Despite the inversion craze slowing down, it's still not over. The new rules released in the fall make it a little tougher to get some of the tax benefits of domiciling abroad, but the benefits are still very achievable. I wouldn't be surprised to see a few of the big pharma guys try to invert again (because they are at a huge disadvantage to their inverted competitors, who pay 5-17% tax, rather than the US statutory rate of 35%).

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Jun 22, 2018

Last comment pretty much covers it. One thing I'd add is that lot of HC Services deals are <$5B range in unsexy business (like animal health distribution), so they don't hit the headline as often. But very active space.

Jun 22, 2018

@KB23, it doesn't matter. All that matters for recruiting is prior experience (internships), a high GPA, and networking. I worked in healthcare IB for a year, and knowledge of the space is not needed, though, you will learn very much in a short period of time on the job.

Jun 22, 2018

Both work but the health major may help you stand out, esp if it is a STEM major

Jun 22, 2018

The major will along the lines of public health science if that makes a difference.

Jun 22, 2018

The STEM major helps in understanding some of the scientific terminology and boosts your story, but is in no way a requirement for working in HC IB. Most of the analysts were finance or liberal arts majors.

Jun 22, 2018

Satan, sorry there are no responses yet. Maybe one of these topics can point you in the right direction:

  • Healthcare Banking Overview I am interested in getting some information on the healthcare investment banking. I have read some ... interested in finding out if this is best way for me to combine my Life Science/Medical background with an ... like especially for those looking to just start out in the industry as intern/analysts. Breaking Into ...
  • Citi Healthcare IBD-interviewing for a specific group with their group coming up soon. Any ideas on how to prep for it would be great too. I have read the ... I am interviewing for a specific group. Thanks. Investment Banking Citi healthcare ... Does anyone know anything about Citi 's Healthcare group? I have an interview specifically ...
  • MBB: which offices to look at for education and healthcare industries? but the descriptions are rather superficial.. Thanks for reading my post! consulting mbb ... education and healthcare industries; can somebody help? I did click though a few individual office websites ...
  • Healthcare Consulting firms, best for healthcare strategy- Best brand and exit opps? Who are the best consulting firms for healthcare strategy? Which firms have the best brand and ... exit opps? How does Evolent stack up? Bonus points for those who don't just say " MBB ". ...
  • Reading is fundamental...the ROI of reading. team, some I have not read, so they can learn different things and bring the best ideas up for ... table? Reading mostly for leisure or work-only? Any good recommendations? These Startup Founders Swear By ... Interesting read from FastCompany.com, many startup founders believe that making the time to read ...
  • What are you reading? What books are you guys reading, or have read/plan on reading? Fiction, non-fiction, biographies, ... that you absolutely recommend? Any great magazines or websites you guys turn to for quality, ... stimulating content? I feel like its essential to sanity always be reading something to Sunday, August 6, ...
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  • Top Tip: Get any MD to read your resume (or anyone to read anything) So no one is returning your sad, sappy, suck up emails? People think you are cold calling for girl ... scout cookies? Well man the f*ck up and lets trick someone into reading your resume. Don't bother ... get your hands on. Insert your resume like, a metaphor for penis entering into a vagina. Figure out an ...
  • More suggestions...

No promises, but sometimes if we mention a user, they will share their wisdom: @MonkeyMann @Yuri the International @matt5488

If those topics were completely useless, don't blame me, blame my programmers...

Jun 22, 2018

Bump

Jun 22, 2018

Email mail someone from your group and get a detailed primer: 100+ pages. May be dated, but still relevant.

Jun 22, 2018

CS HC is actually pretty good, and CS in general has been killing it this year.

Jun 22, 2018

sorry

Jun 22, 2018

Monty -- I was a HC analyst for a couple of years. I can't say I know that much about the HC space though, but more than your average monkey.

Jun 22, 2018

danmthews- i think monty knows all to well how it works......

Jun 22, 2018

too*

Jun 22, 2018

I'm currently working as an analyst in the healthcare group of my firm

Jun 22, 2018

trying to gather a few leads for a good friend..

Jun 22, 2018

i was gonna say i was a SA in the healthcare group at my firm but I guess AllBoutTheU and CompBanker would be better choices if you have questions, lol...

Jun 22, 2018

I PM'd a couple of you. Any advice would be greatly appreciated.

Jun 22, 2018

yep right here

Jun 22, 2018

Uncertainty. Home health recently got destroyed by medicare changes. The "Competitive Bidding" initiative is impacting reimbursement for the largest segments in durable medical equipment. The Affordable Care Act (Obamacare) is also causing massive uncertainty as no one knows if it will get repealed/changed. Furthermore, it could result in ~15 million additional insured Americans that were not previously insured, causing a large spike in the patient base (this is a positive). This environment makes it very difficult to invest money in the sector.

That said -- deals are still getting done and the healthcare specific groups I interact with are still busy. Hard to say.

Jun 22, 2018

Thanks for the response, all great points that make a lot of sense... recently it seems like, at least at GS, HC has been surprisingly quiet while Nat Res has been killing it, though with these kinds of things it is ultimately hard to say what direction dealflow is going to go.

Jun 22, 2018

another brilliant idea obama cooked up is an excise tax on medical device makers as part of healthcare reform. additionally he recently proposed shortening the exclusivity period for biologics from 12 to 7 years in order to pay for job creation (???). So i echo the govt uncertainty.

Additionally, the FDA is a total disaster and the increasingly lengthy and expensive approval process (for devices and drugs) is threatening to strangle early stage investing.

That said, if there are going to be deals getting done in this economy, healthcare is a pretty likely space for them. Pharmas still need to fill their pipelines and several of this years biggest deals have been in devices.

Not strictly healthcare but Hellman Friedman and Carlyle just announced $3.9bn for Pharmaceutical Product Development about a week ago

http://www.hf.com/news/100311.html

Jun 22, 2018

Depends on the sector there will be a continuing trend towards consolidation in hospitals, the CRO market is fragmented and growing. A lot of this is going to be smaller. Big pharma houses will use acquisitions to strengthen their pipelines.

Jun 22, 2018

you're in business school?

Go use their resources. Read industry research on big pharma, med tech, med distribution, and HMOs. A good report will be 30-40 pages.

Read about those 4, and you will be set

Jun 22, 2018
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Jun 22, 2018
Jun 22, 2018