Corporate Finance Theory And Practice Damodaran Pdf' title='Corporate Finance Theory And Practice Damodaran Pdf' />Introduction Corporate investment and venture funding continues to play a pivotal role in the development of novel medical innovation from new pharmaceutical. Healthcare Investment Banking How to Break In, How Deals, Valuation, and Deal Flow is Different, and the Top Exit Opportunities. Healthcare Investment Banking. If youre new here, please click here to get my FREE 5. Thanks for visiting Tony Soprano once said to his shrink after a particularly grueling session I came here today to tell you, in all seriousness, that Im done. And maybe in this crazy economy youre also done youre going to leave your current finance job to pursue sanity and stability. So youd better be thinking about healthcare investment banking. Healthcare you might say. I dont know anyone in healthcare who owns giant mansions lined with gold. But thats OK these Healthcare Regular Joes are the ones who have it easier in a rough economy, and access to plenty of other perks. Heres what youll learn from our healthcare IB interviewee today How to tell your story and break into healthcare IB. I/417TF93aaOL.jpg' alt='Corporate Finance Theory And Practice Damodaran Pdf' title='Corporate Finance Theory And Practice Damodaran Pdf' />What majors and backgrounds are common among healthcare bankers. Why deal flow is more stable than in other sectors, and the most common deal types. The industry sectors within healthcare and how valuation metrics and multiples differ. The all important exit opportunities and where you can learn more about the sector. Oh yeah, and as an added bonus youll get to advise companies that save lives rather than killing people and burning down villages as you normally do in finance. Still Life 2 Save Games there. This post includes valuation and financial analysis commentary by Larry Chen. Anyway, lets get started Healthcare Investment Banking Got Biology Q Lets start with your background did you go through the typical on campus interview route A Yes but I was a Biology major at Cornell and I went in with my parents telling me that I should become a brain surgeon or cardiologist. Like most biology majors, I tried research but didnt want my only friends to be the test tubes I used every day. So I figured that a more well rounded skill set would help me escape that fate. I looked into healthcare consulting ex Triage and healthcare investment banking as a way to get broad exposure to the sector and apply what Id learned as a biology student. Q So was the Biology degree helpful for getting in A Nope, haha, at least not on the technical side I had to learn the finance part myself with your program actually. But it really helped me with storytelling for the interview you have to connect the dots on your personalprofessional history for the interviewer both on the resume, and in the physical interview. And as youve written about before, its all about your story. I/51SY3055NQL.jpg' alt='Corporate Finance Theory And Practice Damodaran Pdf' title='Corporate Finance Theory And Practice Damodaran Pdf' />I went in there and said, Im interested in the field but want to do more than research I want a broad skill set that I can apply to business, and I want to be able to advise healthcare companies on strategic decisions see the why investment banking question answer. Q So do you see a lot of Biology majors in the group A I wouldnt say a lot and its certainly not necessary to break in, but it doesnt hurt either. There are a fair number of bio majors, a few MDs Medical Doctors, not Managing Directors, and even some med school dropouts in my group. As with any industry group, demonstrated interest in the sector is huge for getting in so if you havent done something bio or healthcare related, you need to show that in some other way. The Anatomy of a Healthcare Group. Q It sounds like you have quite a few science geeks in the group. How technical are the sectors you cover Does a Ph. D or MD or two help A Hah, not really, at least not more than certifications and degrees help anywhere else. Here are the major sectors Pharmaceuticals A few of the big companies here are Pfizer, Novartis, Sanofi Aventis, Merck, and Roche. Guides, Books Special Reports. BVR publications bring you the most uptodate thoughtleadership in the valuation profession with guides, books, and special reports. Financial Institutions Groups FIG How Theyre Different, How the Industry is Divided, and Key Tips on FIG Valuation and Interviews. Corporate Finance Theory And Practice Damodaran Pdf' title='Corporate Finance Theory And Practice Damodaran Pdf' />Pharmaceutical companies focus on different types of drugs, different segments of the market e. R D models. For example, Valeant NYSE VRX focuses on dermatology and neurotic therapeutics. Using a leveraged research and development model, a firm such as Valeant often takes on already developed products and focuses on sales and marketing. Pharmaceutical companies are completely dependent on their pipelines a new drug might take 1. R D to pharmacy counters due to the clinical trials that are required. And then the firm only has a patent on the drug for so many years before generics start coming in and driving down the price. So pharmaceutical companies spend a fortune on R D and on acquiring smaller companies so they can constantly replenish their pipelines. A companys operations might also hinge on whether the products are paid for through reimbursement or out of pocket. Clinical trials also have a huge impact on companies stocks, and positive results can send share prices to new highs while negative results can send share prices to their doom. Biotechnology Much like technology companies, biotech firms frequently have little to no revenue, and are evaluated by projecting future paydays. Many of these companies are trying to get acquired by larger pharmaceutical companies who need to find promising new drugs and technologies for their pipelines. Scientific Technical Instrumentation These companies focus on developing equipment, storage facilities, and chemicals powders for use by academic and commercial customers. Examples include Illumina and Thermo Fisher. Companies in this area tend to be very diverse, covering a wide range of clients with reputation, product availability, and active sales channels determining their potential top line growth. These companies grow by targeting new markets, combining divisions, and coming up with new ways to deploy existing products. Hospital Management Firms These companies operate hospitals mostly regionally, and sometimes nationally. Companies that come to mind include Community Health Systems, HCA Holdings, and Vanguard Health Systems. Key drivers include current illness levels, the seasons, and geographic presence. Healthcare Services Sometimes youll find these firms in Business Services or Information Technology. These firms manage records for hospitals or develop ways to track incoming patients. A prime example includes Vangent, which was acquired by General Dynamics. Health Insurance Since these firms operate with premiums and benefits, they are often classified under FIG. Healthcare REITs These firms are really funds that acquire, build, and operate hospitals they are often classified under real estate. Unlimited Abundance Christie Marie Sheldon. Q Great overview. What about valuation in the sector Weve gotten lots of questions from readers wondering how healthcare multiples and methodologies are different. A I hate to disappoint, but theyre not that different. You still see multiples like P E, EV EBITDA, EV Revenue, and so on being used in healthcare. If you dont believe me, take a look at these Fairness Opinions on the Pfizer Wyeth deal and the Roche Illumina deal. Star Monkey Full Version Manager. Q OK, Im going to stop you right there because I think there are some valuation differences but maybe not as much for huge companies. Lets say, for example, that youre valuing a small pharmaceutical company with no revenue yet. How does that work A Thats a good point, though at large banks we dont work with those types of companies quite as much. In that case, we would use a modified sum of the parts analysis and attach a multiple to each phase of the companys clinical trials. So a Phase 1 pharmaceutical might be tagged with 4. Then you would project revenue based on the estimated market size number of patients and price for the drug, and value the company based on that.