There has been a transition from the fully integrated pharmaceutical company discovery model to an increased reliance on in-licensing. A combination of factors including large capital requirements, a lengthy research and development process, and rapidly evolving technologies, has served as a catalyst 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. Royalty Pharma believes that the biopharmaceutical industry is at the beginning stage of this trend and expects continued growth in partnerships and license agreements. The Company estimates that the number of license agreements will grow at a rate greater than new products are approved, since each product is likely to have more than one royalty obligation.