Royalty Pharma (RPRX) Morgan Stanley’s 22nd Annual Global Healthcare Conference summary

Business model evolution and strategy

• Transitioned from acquiring royalties on approved products to funding late-stage clinical trials and creating new royalties, expanding the addressable market significantly.

• Since 2012, deployed $25 billion, with 40% in newly created royalties for unapproved products.

• Reviewed 400 investment opportunities in 2023, signed 120 confidentiality agreements, conducted 90 in-depth reviews, and closed 9 deals deploying $4 billion.

• 40% of capital since 2020 has been repeat deals, reflecting strong partnerships and reputation.

• Added value by sharing proprietary claims data and analytics with partners, enhancing development processes.

Current deal landscape and competitive advantages

• Deal flow remains strong in 2024, with over $2 billion deployed and expectations for continued activity.

• Ability to move quickly and track emerging assets is a key competitive advantage.

• Multiple transactions with the same partners, such as recent deals with Ascendis, highlight relationship-driven model.

• Most deals are negotiated directly or with limited competition, often as the sole party.

Macro environment and funding outlook

• Business is rate agnostic, with flexibility to achieve better returns as rates rise and benefit from lower borrowing costs as rates fall.

• Biotech sector expected to require $1 trillion in funding over the next decade, with synthetic royalties representing a small but growing share.

• Guidance for $10–12 billion in capital deployment over the next five years, considered conservative.