Welcome to Part 3 of our 2026 Life Sciences Industry Outlook series. Today, we are turning to royalty finance transactions in the life sciences industry in 2025 and what to expect in 2026.
Once again, 2025 marked a year of meaningful growth for royalty finance, underscoring the continued evolution of royalty monetization transactions from niche alternatives into established components of the corporate finance toolkit within the life sciences sector. Aggregate transaction value across leading market participants increased to a record level of approximately $6.5 billion, up from approximately $5.7 billion in 2024. While $6.5 billion remains modest when compared with traditional equity or debt markets, the growth trajectory is notable. As recently as the early 2000s, annual aggregate royalty finance transaction value was estimated at less than $200 million per year, highlighting the extent to which royalty financing has relatively quickly become a mainstream funding solution for biopharmaceutical companies.
Participation from traditional private equity firms in the royalty finance ecosystem deepened further in 2025. KKR’s acquisition of a majority stake in Healthcare Royalty Partners (HCRx) in mid-2025 reflects growing institutional conviction in the durability and scalability of royalty-based investment strategies. Meanwhile, Blackstone Life Sciences remained highly active in the space. In Q4 alone, Blackstone both completed a $310 million sale of its royalty interest in Alnylam’s Amvuttra® to Royalty Pharma and entered into a $700 million synthetic royalty transaction tied to future net sales of sacituzumab tirumotecan (sac-TMT) via a development funding agreement with Merck.
Blackstone’s synthetic funding agreement with Merck was notable for an additional reason: it highlighted the increasing willingness of large, well-capitalized pharmaceutical and biotech companies to use clinical funding arrangements as a portfolio de-risking and strategic capital optimization solution, rather than merely as a fundraising tool deployed in response to capital constraints. This theme was echoed across several other high-profile transactions in 2025. BridgeBio’s $300 million sale of European royalties from Beyonttra™ to HCRx and Blue Owl Capital is helping to support and accelerate its self-commercialization efforts of Attruby™ in the United States. Similarly, BeOne Medicines’ up to $950 million sale of a royalty interest in Amgen’s Imdelltra® to Royalty Pharma enhances its flexibility to support broader business objectives.
Innovative deal structures continued in 2025, with multiple underlying assets, staged funding tranches, step‑down or step‑up royalty rates, and put/call rights present in many deals. A particularly creative 2025 transaction was XOMA Royalty Corporation’s recently announced strategic royalty share agreement with Takeda, under which Takeda’s royalty and milestone payment obligations related to Mezagitamab were reduced while XOMA will now receive royalty and milestone payments across a basket of nine different development-stage assets held within Takeda’s externalized assets portfolio. In parallel, hybrid financing structures that blend traditional royalty economics with elements of term debt or structured credit are becoming increasingly prevalent. These transactions may incorporate caps on total returns, milestones, debt-like covenants or even make-whole payments at a maturity date.
Looking ahead to 2026, the royalty financing and monetization market is expected to maintain momentum and continue to grow. On the capital-raising side, a Deloitte royalty market study reported that 87% of surveyed biopharma executives expect to incorporate royalty financing into their capital-raising strategies over the next three years. On the investor side, the expanded capabilities of leading participants in the royalty financing sector, together with the increased committed capital of other established biotech funds, indicate an active outlook for 2026. Although macroeconomic and policy variables, including interest rate trajectories, equity market performance, and regulatory developments, will continue to influence deal dynamics, royalty financing is expected to retain a central role in the life sciences funding landscape throughout 2026 and beyond.
For more information on 2025 royalty financing transaction activity, see Gibson Dunn’s Royalty Finance Tracker.