Biotech boom powers analysts to $4M-a-year salaries: WSJ
Analysts assess companies and write reports that help investors gauge their prospects and interpret news. Their work was separated from that of their colleagues in banking in the 2000s amid reports analysts were hyping companies to drum up business. Yet a perceived link between the prestige of an analyst and a company’s ability to win banking business survived the regulatory clampdown.
“To attract business on financing side, banks must have high-quality analysts respected by the buy side … who will be fair, credible and insightful,” Citigroup’s Yigal Nochomovitz told the WSJ.
Morgan Stanley knows there is a real risk an analyst will take up a better offer. The bank lost Andrew Berens to Leerink Partners earlier this year. Other recent moves include Alethia Young’s switch from Credit Suisse to Cantor and Michael Yee’s arrival at Jefferies. Yee reportedly left RBC Capital Markets after Jefferies offered $4 million a year. The other analysts are said to have received “lucrative” offers.
The $3 million-plus pay packets set biotech apart from other industries, where around $1 million a year is a typical salary. The potential for analysts to burnish the image of their employer in biotech circles and thereby help win business from the industry may account for some of the difference. Another possibility is that the complex science and unproven assets of biotechs make them harder to analyze than companies in other industries, which typically IPO as established businesses.