The job requires working long hours. The morning call is at 7:30 A.M., and if you haven't written a morning note on a topic the night before, you have to come in early enough to have it written and approved prior to the call. The evenings are often a time to catch up on reading after the phones have stopped ringing, and frequently there is a dinner meeting with the managers of a company that lasts until 9 or 10 P.M. In addition, visiting companies, attending scientific and medical meetings, visiting clients, and attending and presenting at industry conferences require a great deal of travel.
The job requires a great deal of dedication because of the hours and the amount of energy spent to keep on top of rapid advances and competition. On the positive side, it is never boring. If you grow tired of working on a medical topic, you can focus on a financial model, or you can call a client to chat about the industry.
Job security is non-existant. Every time the biotech sector tanks, many banks shed their biotech analysts. They rehire when the sector heats up again, but this is not much consolation. Also, as I experienced, the merger mania in the banking world can throw a monkey wrench into your career plans.
How much are analysts paid? This is a tough question to answer because pay can vary greatly and rumors abound. In general, analysts receive a base salary plus a bonus. The base salaries range from about $30,000 to $60,000 for a research associate, $60,000 to $90,000 for a junior analyst, and $90,000 to $125,000 and more for a senior analyst. The base salary is similar to that for most other types of jobs, and there is a range for each level. The names of the levels vary among firms, but typically the grades include research associate, associate analyst, vice president, senior vice president, and managing director.
The bonus is the more difficult part to figure out. It depends on many things and most firms do not have a preset formula for determining the bonus level. Also, different portions of the job can be more or less important at different firms. The bonus pool-the amount of money the firm dedicates to bonuses-is influenced by how profitable the firm has been that year, so bonuses can vary greatly from year to year.
The size of an individual analyst's bonus depends on things you can't control, such as how well the investment banking business in the sector is doing that year. Investment banks make a lot of money by taking companies public and conducting follow-on offerings, so analysts who works on several offerings usually gets a small piece of each fee as a part of their bonus. Some firms emphasize the rankings published in Institutional Investor, a publication that annually picks the top three analysts in each sector according to votes from institutional investors. Some see this as a popularity contest, but it is designed to pick those analysts who help institutional investors make wise investment choices.
Other factors that determine the bonus include quantity and quality of reports published, the opinion of the sales-force as to how helpful the analyst is to them, and the performance of the analyst's recommendations regarding their covered companies.
Bonuses vary from about $50,000 to $1 million for senior analysts, but in general they are at least several hundred thousand dollars. This makes an average analyst's compensation in the range of $300,000 to $500,000, but there are always many exceptions.
However, there are some who believe that good analysts are paid whatever amount it takes to get them to stay with the firm. This creates an atmosphere much like professional sports, where analysts often jump ship to a higher bidder. Rumors of $1 million signing bonuses and multimillion dollar contracts abound.
Writing is important. You must be able to write in a style that is easily understood and that conveys the gist of very complex issues in a way that holds the readers' interest. You also must write quickly, for time is, in fact, money in this business.
Biotechnology is a diverse industry, both in the technologies involved and the people. We can all appreciate the differences between a scientist who is happy in the lab with no one to bother them and a CEO who has the gift of gab. As an analyst, it is important to be able to walk in many different worlds and to communicate in different languages. It is the combination of these different worlds in the biotechnology industry that I find fascinating.
As scientists, we are taught to question, and that is also a key attribute for an analyst. Even when you listen to presentations outside of your field of expertise, your scientific training should allow you to evaluate the information that is presented and ask the right questions. In addition to my scientific training, my work in both the biotechnology and pharmaceutical industries has provided me with the experience necessary to ask the right questions regarding the business aspects of the company.
