Royalty Pharma believes that the biopharmaceutical industry is at the beginning stage of a transition: from the fully integrated pharmaceutical company discovery model to an increased reliance on external co-operations and in-licensing; and expects continued growth in partnerships and license agreements. We estimate the number of license agreements will grow at a rate greater than new product approval, since each product is likely to have more than one royalty obligation.
A combination of factors including: large capital requirements, a lengthy research and development process and rapidly evolving technologies have served as catalysts for the redefinition of the traditional pharmaceutical company model. Through the integration of discovery and innovation efforts of scientists, universities and other biopharmaceutical companies, pharmaceutical companies have been able to expand the product offerings in their pipeline. This efficient collaboration of resources has fostered an unprecedented growth in biopharmaceutical innovation, as evidenced by a record number of licenses and other alliances between larger pharmaceutical firms, smaller biotechnology companies, and university research facilities.