Johnson & Johnson to Participate in the Goldman Sachs 44th Annual Global Healthcare Conference

When it comes to investing in pharmaceutical companies, looking at pipelines and research and development prospects is important. But in-licensing is also key when examining these stocks.

In fact, in-licensing deals might be the pharmaceutical industry’s preferred mode of business development these days — perhaps even more so than M&A activity. These agreements can prove to be very fruitful for companies and their share prices.

The in-licensing strategy is likewise attractive to investors, as in-licensing drugs expedites corporate development while also mitigating risk. So let’s clear up some common questions around the strategy. The article below runs through what it means to in-license a drug and how in-licensing differs from an acquisition. It also covers how royalties affect returns. It’s key for investors to be aware of these intricacies so that they can interpret a firm’s actions correctly and elect to buy or sell at the right time.