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An Introductory Finance Textbook for the Healthcare Industry

Financial tools, business models, and funding strategies for translating biomedical innovation from bench to bedside and beyond

Andrew W. Lo and Shomesh E. Chaudhuri

RESOURCES
PURCHASE

WHY HEALTHCARE FINANCE?

We are living amid a golden age of biomedical innovation, yet entrepreneurs still struggle with the so-called “Valley of Death” when seeking funding for their biotech start-ups. In Healthcare Finance, Andrew Lo and Shomesh Chaudhuri show that there are better ways to finance breakthrough therapies, and they provide the essential financial tools and concepts for creating the next generation of healthcare technologies.

Geared toward MBA and life sciences students, as well as biopharma executives and healthcare investment professionals, this textbook covers the theory and application of financial techniques such as portfolio theory, discounted cash flow analysis, real options, Monte Carlo simulation, and securitization, all within the context of managing biomedical assets. The book demonstrates that more efficient funding structures can reduce financial risks, lower the cost of capital, and bring more lifesaving therapies to patients faster. Students will gain the background, framework, and techniques needed to reshape the healthcare industry in positive ways. Finance doesn’t have to be a zero-sum game, and Healthcare Finance proves that it is possible to do well by doing good.

 

  • Explores new financing methods for the biopharma industry
  • Accessible explanations for making good business decisions in the life sciences
  • Real-world examples, case studies, and practical applications
  • Online content includes videos of lectures and recitations, interactive figures, and self-graded problem sets

Reviews

“Andrew Lo and Shomesh Chaudhuri are pioneers in healthcare finance and this book is a must for business students, scientists, engineers and physicians alike who want to translate their ideas into practice and are looking for the optimal ways of financing them.”

–Robert Langer, Institute Professor, MIT and recipient of both the US National medal of Science and the US National Medal of Technology and Innovation

“Developing treatments to cure diseases is expensive. It is also risky, as knowledge of human physiology remains incomplete. This unique and readable textbook provides a framework for considering investments in this critical space.”

–Phillip A. Sharp, Institute Professor, MIT and 1993 Nobel Laureate in Physiology or Medicine

“A crystal clear — and fascinating — book. It should be of interest to those teaching health economics or healthcare economics, and to anyone who wants to better understand how health care finance works.”

–Emily Oster, Brown University

“Professor Lo and Dr. Chaudhuri have provided the most important text in navigating the financial innovations required to finance healthcare. From basic tools to the most advanced and creative financial concepts, this book is a must-have for beginner and tenured professionals, alike.”

–Terry McGuire, Founder of Polaris Partners and Past Chair of National Venture Capital Association.

“Which new medical discoveries successfully transition from the scientific lab to actually helping patients depends – in large part – on a complicated web of business models and decisions. This book provides a lucid and accessible introduction to this health care finance landscape.”

–Heidi Williams, Stanford University

Authors

Andrew W. Lo

Andrew W. Lo is the Charles E. and Susan T. Harris Professor at the MIT Sloan School of Management, director of the MIT Laboratory for Financial Engineering, and a principal investigator at the MIT Computer Science and Artificial Intelligence Laboratory. He is the author of Adaptive Markets: Financial Evolution at the Speed of Thought, Hedge Funds: An Analytic Perspective, and co-author of A Non-Random Walk Down Wall Street, The Econometrics of Financial Markets, The Evolution of Technical Analysis, and The Heretics of Finance. His awards include Batterymarch, Guggenheim, and Sloan Fellowships; the Paul A. Samuelson Award; the Eugene Fama Prize; the Harry M. Markowitz Award; and numerous teaching awards, and is one of TIME’s “100 most influential people in the world.”

Twitter @AndrewWLo
MIT Faculty Webpage

Shomesh E. Chaudhuri

Shomesh E. Chaudhuri is a co-founder of QLS Advisors where he helps design new funding vehicles and business models for raising and deploying funds to support biomedical innovation. Dr. Chaudhuri has provided detailed fundamental analyses and developed portfolio intelligence platforms for many biopharma companies, consulting directly with CEOs, CFOs, and their staffs to help align their financing structures with their scientific and medical objectives. He has published articles in such journals as the Journal of Financial Economics, the Journal of Econometrics, Management Science, JAMA Oncology, and Drug Discovery Today and has received teaching awards from both Harvard and MIT.

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