Royalty Pharma (RPRX) Morgan Stanley 24th Annual Global Healthcare Conference summary

Capital deployment and growth strategy

• Achieved $10–12 billion five-year deployment target a year ahead of schedule due to robust deal flow and new opportunities in Big Pharma and China.

• Recent deals include $500 million investments with Teva and J&J, signaling industry acceptance of their funding model.

• Expansion into China with a $900 million+ deal and hiring a top local banker to build presence.

• Guidance remains conservative, but expects to maintain or exceed $2–2.5 billion annual deployment and double-digit top-line growth through 2030.

• Growth drivers from Big Pharma and China are expected to extend beyond 2030.

R&D co-funding and synthetic royalty opportunities

• R&D co-funding has become a mainstream part of the business, with $28 billion deployed since 2012, including $11 billion in products in development.

• Shifted from funding less attractive pipeline assets to top programs, enabling lower discount rates and better economics.

• Overcame accounting challenges, enabling deals to be structured as contra R&D, expanding pharma partners’ P&L bandwidth and mitigating risk.

• R&D co-funding with Big Pharma is not yet mainstream but is expected to become a major growth area.

Competitive landscape and return profile

• Operates in a competitive but relatively small market for R&D co-funding, focusing on growing the overall opportunity.

• Approved product investments yield 12–13% unlevered returns, while unapproved assets can reach high teens to 20%+ unlevered, with leverage boosting returns further.

• Portfolio approach balances risks, with successful investments offsetting losses.

• Pharma R&D deals benefit from partners’ scale and infrastructure, enhancing commercialization prospects.