7 Most Profitable Biotech Stocks To Buy Right Now

4. Royalty Pharma plc (NASDAQ:RPRX)

Latest Net Income: $858.98 million  

Royalty Pharma plc (NASDAQ:RPRX) operates uniquely in the biotech industry by acquiring royalty interests in marketed or late-stage biopharmaceutical products rather than developing or marketing drugs. This model allows the company to provide capital to innovators while earning a percentage of future sales, typically ranging from 2% to 20%. By avoiding the risks and costs of drug development, the company benefits from successful pharmaceutical products through strategic investments.

At the upper end of its guidance range, Royalty Pharma plc (NASDAQ:RPRX)’s fiscal year 2024 portfolio receipts came to $2.8 billion. This represents a 13% increase, much beyond its original forecast of 5% to 9%. The business anticipates $2.9 billion to $3.05 billion in portfolio receipts in 2025. Its portfolio now includes four development space treatments and royalties on AD medication.

The FDA has approved Tremfya for ulcerative colitis, Cobenfy for schizophrenia, and Voranigo for brain cancer, among other favorable developments for the company’s portfolio. In addition to $230 million for share repurchases, it invested $2.8 billion to expand its holdings. A fresh $3 billion share repurchase plan was recently approved by its Board, and Royalty Pharma Plc (NASDAQ:RPRX) plans to buy back $2 billion of its shares in 2025.

Patient Capital Opportunity Equity Strategy stated the following regarding Royalty Pharma plc (NASDAQ:RPRX) in its Q2 2024 investor letter:

“While Royalty Pharma plc (NASDAQ:RPRX) is in the healthcare space, it is more like an investment firm that buys royalty assets in the healthcare space. The company has an extremely strong track record, running the business for over 20 years as a private fund before bringing it public. The market opportunity for external royalty funding has only grown as early-stage start-ups need funding and legacy players are looking to lower their debt levels. We think Royalty Pharma is perfectly positioned as the partner of choice. The company is disciplined, maintaining deal internal rate of returns (IRRs) in the low-teens despite the higher interest rate environment. We think as the company continues to deliver as a public company, the market will start paying attention.”