Hey everyone,
I was wondering if someone could explain how Healthcare Royalty Partners operates as a firm. Is this classified as a form of private equity? What is the comp and comp structure at a firm like this? Potential exits?
Here’s their home website to provide some background: https://www.healthcareroyalty.com/
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Firms like these guys are considered Royalty Funds (also similar to https://www.royaltypharma.com/</a">Royalty Pharma) but am not sure they really count as PE - more like funds that specialize in a specific kind of instrument (they package royalty streams into ABS or SPV like instruments)
I would consider it more in the private credit arena but the fund structure is PE-like with an investment period, management fees and carried interest. If you're unfamiliar with royalties, it is the upfront payment for the rights to some or all of the cash flows from a drug/device. The upfront cash flow is typically used to fund other drug development or to help bring that drug to market, it reduces sales risk for the pharma company. In addition to royalties, it sounds like HCRP provides more debt-like instruments with structured repayment that isn’t necessarily tied to sales. Likely exits would be to a credit shop or healthcare in some capacity. Unfortunately I am unable to speak too much on comp.
Yep, this is correct. There are also different media-related royalty funds as well - music royalties is a common one.
I'd also imagine they have a ton of MDs/PhDs on their team. Royalty Pharma and HCRP are very legit firms. Royalty Pharma founder was an ex-Lazard banker and now he's a billionaire.
bump
These funds pay a pretty penny for a lot of the assets they buy and I was always curious how they were able to generate good returns --- they must just leverage tf out of their investments correct?
Pharma just makes a ton of money off drugs that actually make it to market. Drugs are typically pretty binary assets that end up being worth $0 if they can’t get FDA approval or billions if they do. A smart investor who can pick the right drugs will do very well for themself.
Hahahah think ur little out of your element on this one
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