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.
IMPORTANT INFORMATION
This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.
The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.
Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.
The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.
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.