Basically, an investment bank works to acquire or sell shares of pharmaceutical companies. These companies produce generic and over-the-counter drugs, or drugs with brand names. A pharmaceutical investment bank has the expertise to evaluate, negotiate and finance these deals.
Generic biopharma companies
Increasingly, pharmaceutical investment banks are investing in generic biopharma companies. The companies aim to produce generics that will reduce prices. However, this strategy can also lead to fewer innovative versions of drugs, which could negatively impact consumers.
Pharmaceutical companies spend a large amount of money on research and development. It is important for investors to look at how well the company is translating its R&D expenditures into current year revenue. The return on research capital ratio (RORC) gives investors an idea of how much financial gain the company has made from its R&D expenditures.
Pharmaceutical companies must also maintain high levels of liquidity. This is achieved by using borrowed money to purchase their own shares on the stock market. The quick ratio is a good measure of a company’s ability to cover operating expenses. It measures the current assets minus the current liabilities divided by the company’s total assets.
Another consideration for investors is the debt ratio. Pharmaceutical companies have to maintain a high level of debt in order to finance their R&D efforts.
Taking a step back and looking at the bigger picture, the pharmaceutical industry is a huge beast. The over the counter products are only part of the equation. The big dogs are also big on the innovation front. In fact, one of the most interesting aspects of the industry is the nexus of the competition. As mentioned, one of the most important areas of focus is the pharmaceuticals industry. In order to achieve the next big thing, the industry has to innovate – if not reinvent – its various parts. As such, the pharma savvy must take an active role in the innovation cycle. Some of the biggest movers and shakers are currently in the planning stages, including a handful of companies – and their products – that are looking to make their mark.
As you might imagine, some of the most lucrative deals aren’t necessarily signed away on a dime. To facilitate this, the industry has a robust incentives and rebates program. The most notable incentive is the Medicare Part D prescription medication program, which, for its size, is undoubtedly the largest drug payer in the country.
Bulge bracket banks
During the 2008-2009 financial crisis, the major investment banks have diverged from one another. Some of the biggest names in the industry have disappeared. In addition, the market has created a new leaner competitor in elite boutique banks. Whether you’re considering applying to a bulge bracket investment bank or a boutique, there are some things you need to know.
The size of the bank you’re applying to can impact your odds of landing a job. Bulge bracket banks offer a more comprehensive deal experience and earn higher compensation. They also have a more extensive employee network. But you’ll also have to work a lot. Bulge bracket banks can work up to 90-100 hours a week during peak seasons.
The most important service offered by a large bank is sales and trading. This is the team responsible for making the market and distributing stocks to institutional investors. The Equity Research Division also performs market analysis.
Another important service offered by a large bank is Asset Management. This division provides wealth management advisory services to high net worth clients. Bulge bracket banks generate billions of dollars in fees from Asset Management.
Working for a pharmaceutical investment bank
During your career as a pharmaceutical investment banking expert, you’ll be working with large companies and with smaller ones. You’ll also be working with different types of deal types. Standard M&A deals are common, but you can also work on leveraged buyouts (LBOs), as well as high-yield debt financings.
Pharmaceutical companies mainly focus on specific drugs. In order to expand pipelines, they need money. They can either acquire smaller companies or they can buy patents for drugs that they already have. They also need advice on market action and sound advice on the market.
Pharmaceuticals tend to hold up better than other sectors. The industry is expected to grow at a rapid rate. New drugs are being developed every day, and this means more money for investment banks. The pharmaceutical industry is also a very competitive sector. This means that there will be a lot of mergers and acquisitions. Typically, pharmaceutical companies want to buy the patent for drugs that they already have, or they want to merge with a producing company. They might also want to partner with other firms.