Continued capital market volatility, coupled with a costly, tightening, and oftentimes burdensome debt landscape, has driven royalty monetization transactions into the mainstream as life sciences companies increasingly seek non-dilutive financing alternatives to support drug development and related operations. This popularity has also been bolstered by an increased interest on the part of investors to finance earlier-stage assets with development funding and launch capital.
Royalty monetization typically takes one of two forms: Investors buy or finance against royalties from an existing license or collaboration agreement (a “traditional” royalty), or they buy or finance against a product’s future revenue stream (a “synthetic” royalty). While these deals include covenant packages that provide guardrails for what companies can and can’t do with the product assets and related operations, the obligations are typically less onerous than traditional debt, and afford companies up-front capital without the dilution of an equity raise.
Industry data confirms the trend: From 2020 through 2024, royalty financings in biopharma totaled approximately $29.4 billion, more than double the amount raised between 2015 and 2019, with synthetic royalty structures gaining prominence within this trend.1
The momentum has continued in 2025, with several high-profile transactions announced in recent months, which made for a hot summer in the royalty monetization market.
What’s Driving Royalty Monetizations
Several forces are fueling the growth of royalty monetizations. Chief among them: demand for non-dilutive capital. For companies with promising assets, monetizations deliver essential funding while preserving equity — a critical advantage as biotech valuations soften in today’s challenging equity market.
The tightening debt environment is also accelerating adoption of monetization strategies. Higher interest rates, broad asset pledges, and burdensome financial and operational covenants make royalty monetizations a flexible, partnership-oriented alternative.
Investors, meanwhile, are drawn to asset-linked returns. By tying payments directly to sales on a product that can be thoroughly diligenced and modeled, royalty deals offer greater predictability than the volatility of the equity market.
The market has also seen structural innovation. These bespoke deals can include tiered royalties, milestone-based arrangements, capped or hybrid instruments, territory or indication splits, multiproduct deals, and tranched funding, giving both investors and companies the means to engineer economics favorable for the investors’ returns and the companies’ financing needs.
Will the Trend Continue?
Why wouldn’t it? Surveys suggest that nearly 90% of biotech executives are considering a royalty financing in the next three years.2 With such a savvy and creative universe of investors in this space, innovations around development funding, launch capital, and acquisition financing are likely to continue. Even big pharma companies are participating, with firms seeking to take advantage of favorable accounting treatment for their balance sheets and income statements.
While US deals have dominated the market historically, traction is increasing in Europe — notably, Goodwin recently advised GENFIT (France) and Heidelberg Pharma (Germany) in their respective financings with Healthcare Royalty Partners as well as Royalty Pharma on its deals with Ferring Pharmaceuticals (Switzerland), BRAIN Biotech (Germany), and MorphoSys (Germany). We’re also seeing increasing interest in Asian markets, suggesting a continued trend not just in the US but on a global basis.
[1] “Role of Royalties in Funding Biopharma Innovation,” Deloitte (September 2025).
[2] Ibid.
[View source.]
