Investment Career Paths for Scientists

One year after graduating with a degree in political science, Jim Reddoch caught the molecular biology bug and entered the graduate program at the University of Alabama at Birmingham (UAB). Two years into that program, he already had misgivings. Advisers suggested that, once he had a Ph.D., he was virtually assured of an immediate career in academic research. Watching his fellow graduate students finish degrees and search for jobs, "I found that was not the case at all," he recalls. Here's a partial list of jobs related to biotech, pharmaceutical, or healthcare investing: Senior analyst/research associate: Perhaps the path of least resistance to those who have no formal business training (although a class or two in finance would be a good idea). The research associate reports to a more experienced senior analyst. Track a limited number of companies, and produce periodic reports with a recommendation to buy, hold, or sell. Come up with earnings projections and a target price the stock is expected to reach. "We talk to scientists and management at the company to try to find out how it stacks up against [competitors] and then try to translate that to a market that might exist five years from now," says Reddoch. That information is presented to clients ranging from institutional investors to individuals, in the form of one-time reports or ongoing updates. Venture capital researcher: Seeks out good strong businesses for venture capital. Once funded, representatives from the venture capitalist may serve on the company's board, help develop business plans, or set up strategic business and research alliances to help maintain cash flow. Portfolio manager: "Put your money where your mouth is," says Hsu. Run an investment fund that focuses on biotech, pharmaceuticals, or the healthcare industry. You may be purchasing public or private stock, or putting the fund's money into venture capital. The biotechnology and pharmaceutical segment of the stock market is often a hot topic around labs and clinics. It's no secret that scientists sometimes show disdain for the "suits" that run the business side of operations, and some harbor vague suspicions that they could do it themselves if given half a chance. Maybe you're one of those. Yes, you can make the transition into a career in investing. But you'll soon earn a healthy respect for the business people who hold the reigns to the scientific horses. Be prepared to work hard at breaking in--and once in, be prepared for a culture shock. The world of business and investing is both challenging and rewarding, but the nature of the job and the Wall Street culture may take some acclimation. The switch from the lab bench to an investment career is rarely an abrupt decision. Most veterans of the change refer to it as an evolution. John M. Rice, director, medical technology, at Senmed Medical Ventures in Cincinnati, began his career with a Ph.D. in virology. He started with a "traditional" route--he took a postdoc and moved into a position as a staff scientist at the Battelle Memorial Institute in Cincinnati. Over 13 years, he moved into management positions--overseeing projects and small research groups, and finally large divisions. Through those moves, "I learned the business side of science," he says. Instead, he watched others taking two-year postdoctoral positions, sometimes doing two or three in a row. "The more I found out [about the job market] the less it appealed to me," he says. Right around that time, one of the researchers at UAB took public a biotech company called BioCryst Pharmaceuticals Inc., in Birmingham, Ala. "I actually participated in the initial public offering. I bought 100 shares at $6 .... I didn't make much money off it, but I've been hooked on stocks ever since," says Reddoch, who one year into a postdoc at Yale University joined the Wall Street firm Gerard Klauer Mattison and Co. Inc. in New York, as a research associate. Roger Wyse "If expanding your sphere of influence is one of your professional goals, that's really what you're doing," when you move over into business, says Roger Wyse, managing director at Burrill & Co. in San Francisco. Wyse began his career as a plant biologist with the U.S. Department of Agriculture before moving on to administrative positions at Rutgers University and the University of Wisconsin, Madison. Influence is often a main motivator for those who pursue investing, says Rice. "If one wants to have an impact on an organization, then one goes into management or investing. The scientific track doesn't have as much clout." So if you're working in industry and ready to move out of the lab, consider transferring to jobs like product management, business planning, and strategic development. Getting into the patent division will also teach you invaluable lessons about intellectual property and its role in business development. There's also investor relations, of course, which will get you looking at financial sheets and thinking about what makes your company attractive to potential investors. John M. Rice Clinicians might opt to take administrative roles in their organization, or to get into healthcare service organizations, says Hingge Hsu, a principal in Schroder Ventures Life Sciences in Boston. For the academic scientist, Rice suggests getting involved in the technology transfer office to learn about licensing and outplacement of university technology.1 Those willing to go to the time and expense can take their scientific experience to business school and pursue an MBA, and earn a combination of scientific and financial skills. "There's a tremendous market for people with degrees in biology who go and get an MBA or a degree in patent law," says Wyse. A few schools even offer accelerated one-year MBA programs for people attending graduate school in the sciences.2, 3 Once you've made the jump, be prepared for a change. "Somebody who has moved to another country would understand what it's like. The conventions are different," says Ann Barber,4 vice president of investments at New York-based Reliance Group Holdings. The eclectic culture of the scientific laboratory finds no parallel on Wall Street, which places more stress on social skills and teamwork but has an undercurrent of politics and secrecy that most scientists will find novel. A successful analyst or investor relies on many industry contacts to collect information and further his or her career, and that puts a premium on relationships, even as corporate secrets and inside information are kept private. "[As a practicing scientist], I wasn't too focused on what my supervisors' or superiors' sensitivities were. I was doing science and trying to accomplish certain things ...; [investing] is much more focused on how you relate to your peers. You're more dependent on them. How you manage those relationships is much different from how you might [manage relationships] in a scientific environment," says Rice. Barber's experience has been the same. "People are very civil, almost to a fault." And forget all that specialized knowledge gleaned through years of scientific training. "The first thing you have to do is become a generalist, and use your understanding of science and the process of science ...; scientists tend to want to explain every option and evaluate every possibility [to prove a hypothesis. But in business], there's a need to make a move on less-than-perfect information rather than having all the data. We work on hypotheses in business too, but the information is softer," says Rice. "You're not pipetting and measuring three times," echoes Barber. "You're hearing something from an analyst who clearly hasn't done [his] homework, and then you're chasing down the company and the scientists to find an opportunity others may have missed." And there's plenty of chasing to do, in every conceivable commercial application of biological principles. Senmed Medical Ventures has made investments in companies that focus on a wide variety of fields, including tissue engineering, biomaterials, myocardial repair using stem cells, drug discovery tools, genomics projects, medical devices, mammography technology, stereotactic surgery equipment, artificial cartilage, microelectrical mechanical systems, drug discovery, oral vaccines, and a product that purports to be a clinical lab on a chip. Investment circles have plenty to offer, including intellectual challenge, greater influence, and--oh yeah--the potential for an increased salary. But that won't happen right away. Reddoch reports that his salary gives him roughly the same purchasing power as he had as a postdoc, though he expects it to increase in the future. B. Werth, The Billion Dollar Molecule, New York, Touchstone, 1994. Follows the machinations of Vertex, a biotech company focused on designing immune system modulators using rational drug design. The author details the struggles of the company and its scientific managers, business developers, and investors over the course of several years. A revealing look at the business side of science. "I think there is the perception that going to Wall Street is selling out on your principles--exchanging fun, freedom, pursuit of truth, and intellectual challenge for drudgery but big bucks. I think that's an unfair characterization on several levels .... There have to be other reasons to come to Wall Street besides the money," maintains Reddoch. While looking for a job, Reddoch says he went through about 25 different interviews, though not all at different companies. How did he stay with it? "My hobby was learning about biotech companies. I think that's what [Wall Street firms] want more than anything ... they want someone who is willing to become an expert" on companies without any prodding, he says. Hsu agrees. "A lot of successful people don't have a technical background either. I think it's as much initiative and drive, the willingness to do the work and plow your way through." James Kling (www.nasw.org/users/jkling) is a science writer based in Bellingham, Wash. P. Gwynne, "Universities nurture researchers' business start-ups," The Scientist, 12[17]:11-12, Aug. 31, 1998. P. Gwynne, "Programs prepare scientists for the business world," The Scientist, 12[7]:4, March 30, 1998. B. Johnson, "Universities tailor management degrees to science," The Scientist, 12[22]:16, Nov. 9, 1998. A.M. Barber, "Scientist on Wall Street," AWIS Magazine, 27:19, Spring 1998.

Investment Career Paths for Scientists

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