The Private Equity Firm That Quietly Profits on Top-Selling Drugs
A March report by Moody’s Investors Service noted that Royalty Pharma’s portfolio “has benefited from high price increases in the U. S. pharmaceutical market”
and could be “adversely affected if the environment for U. S. pricing dramatically changes or if new legislation is passed that targets U. S. drug pricing.”
Royalty Pharma’s top three drugs have had average annual price increases of 15.7 percent
over the past three years, according to Elsevier’s Gold Standard Drug Database.
In the case of Humira, the top-selling drug that was released in 2003, Royalty Pharma paid $700 million for a royalty interest of less than 3 percent,
which helped the pharmaceutical giant AstraZeneca finance a $1.3 billion purchase in 2006 of the drug developer Cambridge Antibody Technology.
While it is pharmaceutical companies that generally set drug prices, some of the drugs in
which Royalty Pharma owns royalty rights have been criticized for their high prices.
But a little-known private equity investor, Royalty Pharma, has built an unusual investment portfolio valued at $15
billion — it buys up the rights to royalties on future drug sales — while largely avoiding public controversy.