Royalty purchase returns
Price, receipts, IRR, multiple and the highest price.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: royalty purchase returns.Updated 5 November 2026
Part of healthcare financial models, with the models, labs and guides around it.
What it does
The buyer’s side of a royalty sale. The price is paid on the day, and the royalty and milestones bought arrive over the rest of the term, so the purchase is a series of cash flows with one outflow at the start. Its IRR is compared with the buyer’s target return; the highest price that still earns the target is the receipts discounted at that return. Peak sales and the date generics arrive move the IRR most, which is why the sensitivity table sets peak sales against the price.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 32–33: Price paid for the Product B royalty, Target return on a royalty purchase
- Purchase, rows 6–8: Purchase cash flow, Cumulative cash flow, Price not yet recovered
- Purchase, rows 11–16: Purchase IRR, Multiple of the price, NPV at the discount rate, Highest price for the target return…
What a reviewer looks for
- Receipts from before the purchase date counted in the return.
- A development product’s receipts priced unrisked.
- The IRR quoted without the price at which the target return is earned.
Learn it, then build it
Vocabulary: IRR, MoIC, Royalty Monetisation.