Investment Opportunity: LifeSaving Drug Licensing
Profitableandseeingrapidexpansioninrecentyears,thepharmaceutical businessisasectorthathasabrightfutureaheadofit.Itisanticipatedthatby theyear2023,thetotalvalueoftheworldwidemarketwouldexceed$1.5 trillion.Whilethereisagreatdealofregulationandfiercecompetitioninthe business,investorsmaytakeadvantageofawidevarietyofinvestmentoptions.
Oneoftheseopportunitiesisinvestinginthelicensingofpotentiallylife-saving drugs.Inthispaper,wewillexaminetheinvestmentopportunitygivenbylifesavingdruglicensing,includingtheadvantages,dangers,andconcernsfor investors.Specifically,wewillfocusonthepotentialforprofit,thepotentialfor loss,andthepotentialforboth.
What is life-saving drug licensing?
Theprocessofgettinglegalauthorizationtoproduceanddistributelife-saving medicationsisreferredtoasthelife-savingdruglicensingpharmaceuticals. Cancer,cardiovasculardisease,andviraldisordersareonlysomeoftheailments thatmaybetreatedwiththesepharmaceuticals,whichareconsideredtobe criticalorlife-threateningconditions.
Itispossibleforpharmaceuticalfirmstoproduceandmarketthesetreatments byusingexistingtechnologyandresearchthankstolicensingagreements,which eliminatestheneedformajorinvestmentsinresearchanddevelopment.
Benefits of life-saving drug licensing;
1. High Demand
Duetothecrucialandlife-savingnatureofthesepharmaceuticals,thereisa significantdemandforthesemedications.Thepharmaceuticalindustrythus benefitsfromareliableandcontinuoussourceofincomeasaresultofthis.
2. Established Market
Themarketforpharmaceuticalsthatcansavelivesiswellestablished,andthere areregulatorysystemsinplacethathavebeendeveloped.Thisindicatesthat purchasingalicenseisaninvestmentopportunitywithalowlevelofrisk.
3. Reduced R&D Costs
Life-savingdruglicensinggivespharmaceuticalbusinessestheopportunityto profitfrompreviouslyconductedresearchandtechnology,whichinturnreduces theneedforcostlyresearchanddevelopmentexpenses.
4. Diversification
Investors,especiallythosewithcurrentportfoliosinthepharmaceutical business,mayfindthatinvestinginthelicensingoflife-savingdrugspresentsa chancefordiversificationviatheuseofotherassetclasses.
5. Strong Return on Investment
Alargereturnoninvestmentmaybepossibleforinvestorsthankstotheminimal riskoflicensingrequirementsincomparisontothegreatdemandfortreatments thatmaysavepeople’slives.
Risks of life-saving drug licensing;
1. Regulatory Risks
Theregulatoryenvironmentaroundpharmaceuticalsthatarecapableofsaving livesmaybebothcomplicatedandrigorous.Thismaycausethelicensing proceduretobedelayedorevenrejected,whichwillhaveaneffectonincome sources.
2. Competition
Becauseoftheintensecompetitioninthepharmaceuticalsector,licensing potentiallylife-savingmedicationsmightbringinalargenumberofnewrivals, whichcanhaveaneffectonmarketshareandthepossibilityofincome.
3. Pricing Pressures
Pharmaceuticalbusinessesarefeelingtheneedtopricetheirwaresinamanner thatismorecompetitive.Thismayhaveaneffectonthevarioussourcesof income,aswellasdiminishthereturnoninvestmentfortheinvestors.
4. Manufacturing Risks
Theproductionofmedicinesthatmaysavelivescanbeadifficultandtimeconsumingprocessthatcallsforspecializedequipmentandpersonnel.Anyflaws withthemanufacturingprocessmightresultinproductiondelaysorquality controlconcerns,bothofwhichcanhaveaneffectonrevenuestreams.
Considerations for Investors;
1. Market Research
Investorsinapotentiallylife-savingmedicineshouldfirstperformexhaustive marketresearchtogetacomprehensiveunderstandingofthecompetitive
environment,regulatoryrequirements,anddemandforthetreatmentin question.
2. Financial Analysis
Investorsneedtodoafinancialstudytoevaluatetheprospectivereturnon investment,whichshouldincludeanassessmentofthepotentialincome,the costsoflicensing,andtheexpendituresofproduction.
3. Due Diligence
Duediligenceshouldbeperformedonthepharmaceuticalfirmbypotential investorsbeforemakinganinvestmentinthatbusiness.Thisshouldcontainan assessmentofthecompany’spreviousachievementsintermsofitsfinancial performance,managementteam,andstandingintheindustry.
4. Risk Management
Inordertoreducethepotentialnegativeoutcomeslinkedwiththeapprovalof life-savingmedications,investorsshouldhaveariskmanagementplaninplace. Thismayentailinvestinginseverallicensingprospectsordiversifyingtheir businessinsomeotherway.
Case Study: Gilead Sciences
GileadSciencesisapharmaceuticalbusinessthathassuccessfullycapitalizedon life-savingdruglicensinginordertocreatemajorincomestreams.Thelicensing ofantiviralmedications,suchasthoseusedtotreatHIVandhepatitisC,isthe cornerstoneofthecompany’ssuccess.
GileadScienceshasreceivedapprovaltomarketanumberofantiviral medications,suchasSovaldiandHarvoni,whichareusedinthetreatmentof hepatitisC.Thesalesofthesemedicationsreachedastaggering20billiondollars intheyear2015,resultinginhugeincomeforthecorporation.
Inadditiontopurchasinglicensesforalreadyexistingmedications,Gilead Scienceshasmadesignificantinvestmentsintheresearchanddevelopmentof novelmedications.
Nonetheless,thecorporationhasbeencriticizedforchargingexcessivelyhigh ratesforitsmedications,especiallyintheUnitedStates.Becauseofthis,the publicaswellaspoliticalfiguresareputtingpressureonthecorporationtocut itscosts.
GileadSciencesisstillathrivingpharmaceuticalfirmdespitethepressurethat hasbeenputonpricing,andthecompanyhasagreattrackrecordoflicensing andproducingproductsthatsavelives.
Bottom line
Investorswhoarewantingtodiversifytheirportfoliooracquireexposuretothe pharmaceuticalbusinessmightfindaone-of-a-kindinvestmentopportunityin thelicensingoflife-savingpharmaceuticals.Despitethefactthatthisinvestment opportunityisnotwithoutitsdangers,pharmaceuticalbusinessesmayanticipate aconsistentflowofprofitsbecauseofthegreatdemandforpharmaceuticalsthat cansavepatients’livesandthewell-establishedindustry.
Beforeputtingmoneyintopotentiallylife-savingdruglicensingprospects, investorsshouldmakesuretheyhaveconductedexhaustivemarketresearch, financialanalysis,andotherformsofduediligence.GileadSciencesisan excellentexampleofapharmaceuticalbusinessthathasachievedtremendous successbycapitalizingonlicenseagreementsinordertocreatemajorrevenue streams.