The world of health care is changing rapidly. Though some disruptions in the sector may result in more deals in the short term, they will likely lead to dramatic changes in 20-30 years. In the United States, healthcare companies dominate the industry. As such, they tend to charge domestically higher prices to compensate for lower prices mandated by governments in other countries. Healthcare investment banking can provide insight into the future trends in the industry. Listed below are three reasons to work in healthcare investment banking.
Health care is a growing sector
There are several reasons why the health care industry is a promising career choice. In addition to the financial benefits, healthcare has a high growth potential and many new startups are operating in the sector. Various types of healthcare deals are handled by investment banks, including merger and acquisition transactions, leveraged finance advisory, and private equity. Bankers are often responsible for helping clients determine which products and prices to offer. The sector is considered a “defensive” industry, which is why it fared better in the 2008-2009 credit crunch.
It’s a niche market
For those looking for a lucrative niche market that does not require a high-level MBA, the healthcare industry can be a good fit. The industry isn’t as highly competitive as other sectors, but if you have relevant experience in the field, you can position yourself for future PE, HF, or VC roles. This niche market is also relatively safe, as there are no “solved” problems in healthcare. As long as big companies need to replenish their pipelines, healthcare investment banking will remain strong.
It’s highly regulated
Unlike other investment banking sectors, healthcare investment banking is highly regulated. While a healthcare background is helpful, it is not required. Undergrads from unrelated majors are often hired for healthcare investment banking positions. Medical knowledge is useful for a niche sector, but more general knowledge of healthcare business models is essential. Experiencing the healthcare sector will help you tell a better story about the company’s strengths and weaknesses.
It’s a diverse sector
Healthcare Investment Banking is a specialized field that advises companies in the healthcare sector on mergers and acquisitions, debt and equity issuances, and other financing activities. Many banks have healthcare teams, and most of them break down healthcare into different industry segments. In terms of specialization, healthcare investment banking can be divided into four main categories: Biotechnology, Healthcare Services & IT, Life Sciences, and Medical Technology.
It’s a good career path
If you’re considering a career change, consider healthcare investment banking. This sector offers many opportunities for exit. It is defensive in standard recessions, but if you can position yourself to become an HF, VC, or CD, you can exit at any time. The industry will never be “solved,” and deal activity will remain high as long as large companies need to replenish their pipelines.
Looking for help in investing in this sector? Contact Chardan Capital Markets today.