We are living in 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 for 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 diversification, 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. Readers 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
- Provides accessible explanations for making good business decisions in the life sciences
- Analyzes real-world examples, case studies, and practical applications
- Includes access to videos of lectures and recitations, interactive figures, self-graded problem sets, and other online content
Awards and Recognition
- Finalist for the PROSE Award in Reference Works – Social Sciences, Association of American Publishers
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 an external faculty member at the Santa Fe Institute. His books include Adaptive Markets and Hedge Funds (both Princeton). Shomesh E. Chaudhuri is a cofounder of QLS Advisors. 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.
“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 healthcare finance works.”—Emily Oster, author of The Family Firm: A Data-Driven Guide to Better Decision Making in the Early School Years
“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, winner of Nobel Prize in Physiology or Medicine
“Lo and Chaudhuri have written the most important book for navigating the financial innovations required to turn today’s rapid advances in biology and medicine into new therapies that will change the practice of healthcare. From basic tools to the most advanced and creative financial concepts, Healthcare Finance is must-read for students and professionals alike.”—Terry McGuire, founder of Polaris Partners and former chair of the National Venture Capital Association
“Andrew Lo and Shomesh Chaudhuri are pioneers in healthcare finance and this is a must-read for business students, scientists, engineers, and physicians who want to translate their ideas into practice and are looking for optimal ways of financing them.”—Robert Langer, Massachusetts Institute of Technology
“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 the landscape of healthcare finance.”—Heidi Williams, Stanford University
