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Sep 12, 2011
 |  BioCentury  |  Finance

For Royalty, debt is king

Royalty Pharma raises $3.6B in debt; ready to raise more for play in M&A space

The proceeds from last week's $3.6 billion debt financing by Royalty Pharma have all been spoken for through a combination of refinancing and a distribution to shareholders, but the company will be going back to the well this fall.

Royalty Pharma has made a living from buying future royalty streams - from academic and research institutions, biotechs and pharmas - in exchange for lump sum payments. Its portfolio includes royalty interests for 28 drugs approved in the U.S. and/or Europe.

The company's royalty revenue grew 17% to $809 million last year, and for FY11 revenues are expected to grow 36% to $1.1 billion. It reported EBITDA of $782 million in 2010.

The expanding royalty stream has given Royalty Pharma access to larger debt financings, which in turn has increased its appetite for bigger deals, according to CEO Pablo Legorreta.

Going forward,...

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