May 2022 / VIDEO
Big Pharma: Navigating a Golden Age of Innovation
Investors should focus on trends in the duration and diversity of a large-cap biopharma company’s cash flows
Key Insights
- Investors should focus on trends in the duration and diversity of a large-cap biopharma company’s cash flows.
- Oncology and immunology, along with Alzheimer’s disease and obesity, are areas where we see a strong overlap between innovation and commercial potential.
- We see the potential for a sharp increase in biopharma mergers and acquistions. This trend is likely to focus primarily on small to mid-sized targets.
I am optimistic that we are at the beginning of a golden age of drug discovery, fueled by the technological and scientific advances of the past few decades. Amid all this change, however, my framework for evaluating large-cap biopharma companies remains consistent. The key, I believe, is viewing these innovations through a commercial lens and focusing on trends in the duration and diversity of a company’s cash flows.
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Jeff Holford is an investment analyst covering health care companies in the U.S. Equity Division. He is an Investment Advisory Committee member of the Health Sciences, US Dividend Growth Equity, US Structured Research Equity, US All-Cap Opportunities Equity, and International Core Equity Strategies. Jeff is a vice president of T. Rowe Price Group, Inc.