Those who are IB analysts in healthcare, I have a few questions (MUCH APPRECIATED)

Just signed my IB offer for FT for healthcare, I have a few questions off my mind- 


1) Do you feel like your lack of knowledge on healthcare (I assume we were mostly all finance/econ/accounting majors) has affected your work?

2) How does healthcare coverage typically compare to other coverage groups (hours, pay, perceived "prestige" outlook (I know prestige doesn't matter at all I was just wondering, e.x is healthcare harder to get into than consumer/technology?)

3) How does your actual technical work differ from other coverage groups (I assume theres a lot of crazy assumptions you need to account for with DCFs and other models for healthcare) 

4) What are typical exit opportunities? Just healthcare focused PE firms? 

5) What are some huge trends right now taking over Healthcare and into 2022? 

6) What are some resources you used to catch up on healthcare knowledge/trends?


Thank you so much, I genuinely appreciate anyone taking the time to help me with these questions. I tried searching here and google but found a lot of incomplete answers. 

 

1 - For services/health tech not at all. Science background would be helpful for some spaces in pharma but it's not necessary. Spec/Gen pharma science background doesn't matter much because the drugs are making $$$. Biopharma teams are more science intensive so they will prefer science backgrounds because the drugs are not generating any revenue yet. The value is an idea based on the science/data. 

2 - All marginal differences. HC deal flow is high at the moment so hours tend to be slightly longer (maybe?). All my friends non HC friends are getting worked regardless so it really doesn't matter. 

3 - Services/health tech valuation are standard. The assumptions for some pharma gets a bit out there, especially if it's not generic, but just do what your king (managing director) says. If someone tells you they know what's going to happen to a drug in 2035 they're lying. 

4 - You can place all over, especially if you're at a "stronger" firm. This site likes to say otherwise. Obviously you'll have a leg for HC focused shops. There are SO many lifestyle MM/LMM PE shops that do a lot of work in HC if that's more your speed. 

5 - We just sell what we can sell 

6 - fierce pharma and some WSJ does it for me. You'll get access to other newsletters when you start.  

hope this helps

 

Thank you so much for taking the time to write this out for me. Really appreciate it. 

 
Most Helpful

I came from HC IB. Responses below:

1) Not at all. If you pay attention and try hard to get up to speed, you'll climb the learning curve quickly and with more experience you'll begin to understand the industry.

2) Depends on what bank you're at and what group you're in. If you're in Biotech/Biopharma, you'll probably be doing mostly equity raises, which is less useful if you're trying to move to PE after banking because you won't have M&A experience. If you're in Healthcare, but at a non-healthcare focused bank like Raymond James, that's fine, but it's not going to compete with the likes of larger, more prominent and reputable healthcare groups across the street. Overall, HC is almost a quarter of US GDP. The industry is so big and there's so many different sub-sectors, it's a great place to start your career. In the first stage of your career, you're not going to get pigeon-holed for being in an industry coverage group. You might be at a slight disadvantage if you were in like, energy, or FIG, because they do things differently, but healthcare is common and people generally know it's good experience that is broadly applicable.

3) It's pretty standard. No "crazy" assumptions or anything like that. You'll learn any nuances for your group on the job.

4) What are typical exit opportunities? Just healthcare focused PE firms? Not just HC-focused firms. With healthcare coverage, many groups will give you a look. Healthcare can encompass products, services, tech, growth, large cap, and more. It's broad experience. You seem to have a weird idea that working in a healthcare coverage group is going to make you "the healthcare guy" for your whole career. If you want it to, it can, and you can spend your whole career in healthcare if you choose; but it's not going to limit your options just because you were in that industry group. It's banking. It's M&A.  

5) This is such a broad question. Again, HC is almost a quarter of US GDP. It's trillions of dollars. "Healthcare" is not specific enough for anybody to give you a good answer to this question. What are you talking about - pharma? med device? senior housing/skilled nursing/assisted living? pharma and healthcare services? tools and diagnostics? contract manufacturing and OEM for healthcare products and/or medical devices? Hospital systems?

6) Just enjoy your last year of college. You'll learn what you need to know on the job.

Array
 

Congrats on your offer. Look, it depends what you want, like I can't answer that for you. You interviewed there and accepted the position - what do YOU think about it? If you're looking for a healthcare-focused investment bank in a non-NYC/SF/CHI city (tier 2 or 3 city) that does lower middle market deals and probably has potential for a career-track position, you won the lottery! And maybe that is exactly what you're looking for, and if so, perfect. Different strokes for different folks. If you're after prestige of a bulge bracket or elite boutique in a major tier 1 city, I'm pretty sure Cain Brothers is under the KeyBanc umbrella, so make of that what you will, but I don't see KeyBanc analysts going to work at ~GTCR/Linden/whathaveyou. It depends on your goals. What I think about Cain Brothers doesn't matter. Every bank serves its own purpose. Don't let the "prestige" trap trick you into doing something you don't want to do. If you're not sure what you want to do, which is more likely, since you're a college student, going after prestige might make more sense, because it will give you a bigger platform to jump off of into whatever it is you decide you want to do with your career, whenever you make that determination. For me, I was open about the fact that I didn't know what I was looking for - I still don't 100% know what I want to do. So I took the best offer I could get in banking, I stayed there for my analyst stint, and then moved on to something that I found more interesting, working with a better group of people, with a lifestyle that suited me better. Could I have done that if I worked at Cain Brothers? Probably not. Idk man.

Array
 

1) Do you feel like your lack of knowledge on healthcare (I assume we were mostly all finance/econ/accounting majors) has affected your work?

As others have said, it really depends on what subsector you are covering.

Biotech, or, drugs: you do need a medical background to succeed in this field because when you pitch clients you need to do your own DD to get a sense of whether that Phase 2a pipeline drug is as promising as the management says. When you position the client to say PE investors during the roadshow, you need to demonstrate an understanding of the drug as well. I do NOT prefer this subsector as I didn't go to medical school.

Medical devices: some people think you don't need a scientific background in this field. I believe that is wrong. I personally know someone (mother of a really close buddy) who drafts medical devices policies for the FDA and it requires a ton of technical knowledge to really understand devices. However, devices (mainly equipment, not consumables because there is not much to it) are easier than drugs.

MedTech and healthcare services: no you don't need any scientific background here.

2) Only thing I want to say here is yeah you do a lot of equity raise, a.k.a IPOs

3) How does your actual technical work differ from other coverage groups (I assume theres a lot of crazy assumptions you need to account for with DCFs and other models for healthcare) 

Yeah for pre-revenue biotech firms it's really garbage in garbage out because you just don't know. I'm working with this client who went IPO 6 years ago on a deal and they still haven't had any commercialized products. I mean...come on. 

You wlll build operating models --- nothing too complicated here, link and balance 3 statements, revenue build-up and that's pretty much it.

Although your balance sheet can be an ass...

You will also build some risk-adjusted DCFs for biotech companies' pipeline drugs. I don't know too much about this one tbh. 

4) What are typical exit opportunities? Just healthcare focused PE firms? 

Don't know...still in the pond.

5) What are some huge trends right now taking over Healthcare and into 2022? 

I sincerely hope some charlatan biotech firms get taken down from the public market and don't continue to get hype that much. I think investors somehow have this holy faith in those firms --- might be because of covid-19 --- and that created a bubble. At the end of the day, you are a company and you need to make some damn net income so you have retained earnings and that flows into your shareholder's equity no? If you keep burning cash and incur operating loss/net loss after 8, 10, or 15 years --- 15 can be seen as a standard drug development timeline, on average --- then investors gotta have this epiphany that they made a dumb investment and you are a conman or conwoman. 

I've also seen companies when I was doing some industry analysis where the founder got like 80% of the company during the IPO and then gradually cashed out. Eventually he just quit and left the industry altogether. All his pipeline was a huge lie and no, it was not securities fraud and he went away fine with this boatload of $. All the investors were devastated and all the employees were fucked. 

That aside, I believe healthcare tech is really taking off now because of covid-19. Others have covered this pretty well.  

6) What are some resources you used to catch up on healthcare knowledge/trends?

My co-worker who went to med school, Fierece websites, and sometimes academic papers. I like reading papers in general, just not healthcare in particular because I don't always know what E78-HUI9102349 (I just made this up. Yes it's sarcasm) is or synthetic immunotherapy (just made this up) is.

 

I started in healthcare banking years ago post school and now cover software at a hedge fund. I'll chime in my two cents.

1: largely agree with what others have said. I do think HC in general is tougher than other sectors, however, from understanding the business models (much more to understand given the complex chain HC and more regulatory).

4: you can do anything for the most part. I went to a HC PE firm after banking and did that for a few years. After that, I received interviews for HC roles, generalist roles, consumer roles, and tech roles. It was more with the understanding that if I switched industry, I'd obviously have to learn the industries but that I'm smart enough to do it eventually. Obviously the longer you're in an industry and switch to another, it'll set you back somewhat, but that would be a case by case situation. Tougher the more senior you get too. But it's not something I'd worry about for the first job. 

 

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