Is Healthcare PE possible with no healthcare coverage experience? If so, what should my strategy be?

Got placed in a product group at one of GS/MS/JPM and am very excited to be here. If I were to consider buyside opportunities, I think I would LOVE to exit to a Healthcare focused firm or at least at a place where I can get lots of Healthcare exposure. I have no doctors in the family, was not a bio or chem major, and barely keep up with the industry at the moment, mostly because I barely keep up with any industry at all given I am fresh out of school and currently focusing strictly on my job.

I would want Healthcare because I am genuinely a pretty intellectually curious person and would likely get super into learning about drugs and other medical advancements, and also because I anticipate there being plenty of room for exciting innovation/disruption well into the future given the ever changing regulatory environment and how little we know about things like the human brain, appendix, Alzheimer's cancer, etc. In my product group, I will of course get some exposure to HC deals but obviously not as deep as if I was in coverage.

My question is, is it possible for me to break into a HC focused investing role, and if so, what would be the best way to maximize my chances of doing so given what you all know of my background? Traditional buyout vs growth? Megafunds with HC teams or smaller firms with HC exclusivity? Should I try to lateral to a HC coverage group? If lateraling is the answer, should I take whatever HC opportunity I can find even if it means leaving my top BB for a specialist/boutique? What efficient resources can I start keeping up with to demonstrate an interest in the space so I'll have a nice story to tell when it's show time? Should I prepare for interviews/modeling tests in a particularly different way? Any recent Healthcare 101 forums/posts/websites (the best i've seen on this site is a post from 2014).

For those with a HC focus on the buyside, how would a candidate with no obvious HC expertise make herself competitive against HC coverage analysts?

Any feedback is appreciated. Thanks all for the time.

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Comments (16)

  • Analyst 1 in IB - Gen
Oct 28, 2020 - 10:05am

Anyone in the industry correct me if I'm wrong here:

I feel like HC is the natural next step of massive innovation and discovery, and also healthcare is something as tangible in my eyes as consumer or tech products. Its the human body, which all of us have.

As for my thesis on innovation, from what I can gather, we are quickly running up against a sort of asymptote in tech innovation (at least until 5G becomes more fully accessible). We have a shit ton of big data that even companies like Google and Amazon are not sure how to use efficiently or maybe don't need to given their respective positions as market leaders. Think about it; packed into our cell phones is more computer and processing power than the super-computers and data centers that we relied on for our first couple of space expeditions. Yet, we still have very little understanding of our own human brains, emotions, even COVID to be topical. I just think there's as much or more run room for exciting innovation in healthcare than in tech or any other space.

Jun 6, 2021 - 3:39pm

Very strict privacy laws for healthcare makes this seem a lot more idealistic than realistic. I work in the industry and it's definitely ideal for this to happen but it's incredibly difficult due to the legality and security issues that may arise.

I do think HCIT is super hot but is going to keep changing over time. The type of innovation you're talking about are often investments made at VC/growth equity funds. Not sure if PE would be the best step if this your goal.

  • Associate 1 in PE - LBOs
Oct 27, 2020 - 11:33pm

Assuming you're in M&A or LevFin, just try to work on HC deals to the extent possible. You'll have to do work on your own to understand the industry and prove during interviews that you're interested in the space, but no reason you shouldn't be able to move into a healthcare focused buyside role 

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  • Analyst 1 in IB - Gen
Oct 28, 2020 - 9:59am

Do you have any suggestion on how a layman can get up to speed as efficiently as possible? I've tried a couple of times to find resources but there just seems to be so much information out there that I am finding it difficult to see the forest through the trees, especially keeping a finance lens on it rather than a research lens.

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  • Associate 1 in PE - LBOs
Oct 28, 2020 - 10:15am

- Read equity research reports. Pull the most recent initiating coverage reports for leaders in each healthcare vertical of interest as they'll help you get up to speed on the space generally. Look for more recent macro / vertical summary reports to identify the current key issues and areas of focus

- Make an analyst friend in the HC coverage group at your bank and ask for them to share the standard pages for HC overall and each vertical (usually most coverage teams will update these every quarter or month). Ask also for any group specific training materials, as they may have industry primers available

- Add news alerts for the main players in the spaces you're interested in. Search for HC investing focused blogs or email distributions to follow

Oct 27, 2020 - 11:45pm

What kind of healthcare do you want to do? Talking about drugs and medical advances suggests something in the pharma / life sciences space, which is very difficult (but not impossible) to do without a background in bio/chem (often, but again not necessarily, an MS or PhD). 
 

If you're interested in healthcare services, HCIT, or healthcare products then it's a much easier transition to make. The more you can point to evidence of your interest in healthcare the easier this will be. 

  • Analyst 1 in IB - Gen
Oct 28, 2020 - 9:57am

Yeah I guess I would gravitate toward drugs/advances just because it sounds cooler. I have this vision of all this Big Data collection that we've been working on since iPhones is just begging to be better applied to the healthcare in the form of better drugs to cure diseases or conditions, and this will be further accelerated when 5G tech becomes available and we can crunch HUGE numbers and simulations in a matter of seconds. Sounds like HCIT could fall into the tech category where I wouldn't necessarily need to know as much about the ways an individual drug bonds or blocks receptors in the brain etc.

Could you specify what "healthcare products" would be, if not HCIT or the actual drugs themselves?

Oct 28, 2020 - 2:46pm

Healthcare products encompasses all the various items that go into the delivery of medical services. Bandages, catheters, surgical tools, etc.

The medical devices side also starts to blend between healthcare products, tech, and life sciences (e.g. implants, monitoring equipment, diagnostic equipment). 
 

HCIT can be handled by either healthcare-dedicated groups or tech-focused groups. Lots of stuff under the healthcare umbrella is really a cross-section of other industries (medical transportation = transportation, retail healthcare is somewhat like to traditional retail, products = manufacturing or consumer durable / nondurables, facilities crosses over into real estate, wearables = consumer products, etc)

Oct 29, 2020 - 7:14am

You'd probably be easiest place in HC services. Anything pertaining to life sciences etc could be tough given the demand for sector knowledge and the supply that kids coming from HC coverage can potentially provide. I don't think it really makes a difference honestly whether an analyst has a pharma deal on his/her resume vs the other M&A kid who's worked on a tech deal given both jobs involve mostly just process work and not really a deep industry understanding but that kind of experience is generally judged when making a call between two candidates 

  • Associate 3 in PE - LBOs
Oct 31, 2020 - 10:05am

Bain does a review of Healthcare PE, should be able to find it via google search. Reach out to alumni of your group or school who are in healthcare investing roles. Healthcare is a pretty hot market in private equity. EQT, New Mountain, and Welsh Carson are a few firms that come to mind. Most of the megafunds have a healthcare vertical. 
 

If I were you, I would spend 90% of my effort towards preparing for the interviews as any other candidate would. If you come off as technically and socially proficient, then people will want you. Refine your story on why you want healthcare and your commitment to getting staffings in that sector. There may be a slight bias towards someone with a healthcare background, but it will not be insurmountable. To be candid, it helps that you are a women and there is still a dearth of talented women who are committed PE. 

Jan 4, 2021 - 1:33pm
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