The Landscape of Vaccine Royalties and Royalty Financing

How Vaccine Royalty Streams Arise

Vaccine royalties typically originate from IP licensing between research institutions and commercial developers. A university, government lab, or platform biotech invents a key component — an antigen design, adjuvant, delivery system, or manufacturing process — and licenses it to a pharma company for development and commercialisation. The license entitles the IP holder to a percentage of net sales once the product reaches market.

In the United States, the Bayh-Dole Act allows universities and federal labs to patent discoveries made with government funding and license them commercially. This framework underpins many vaccine royalty streams. The NIH, for instance, co-invented the virus-like particle technology behind Merck's Gardasil and GSK's Cervarix, and receives ongoing royalties from both products. Academic researchers who contributed foundational work on adjuvants, mRNA modifications, or protein stabilisation similarly hold royalty stakes when their inventions are incorporated into commercial vaccines.

A distinguishing feature of vaccines is that multiple royalty layers often stack on a single product. A COVID-19 mRNA vaccine, for example, might carry separate royalty obligations for the mRNA backbone chemistry, the lipid nanoparticle delivery system, the spike protein stabilisation design, and codon optimisation methods — each owned by a different institution or company. This stacking creates complexity that rarely arises with small-molecule therapeutics, where a single composition-of-matter patent typically dominates.

Royalty rates on vaccines are typically single-digit percentages of net sales, sometimes with tiered structures that step down at higher sales thresholds. Despite modest rates, the absolute payments can be substantial when applied to products generating billions in annual revenue. Where multiple royalties stack, the aggregate royalty burden on the manufacturer becomes a meaningful cost-of-goods consideration — and a potential source of litigation if any layer was used without a licence.

How Vaccine Deals Differ from Therapeutic Royalties

Readers familiar with therapeutic royalty transactions will recognise the basic structures — outright royalty purchases, synthetic royalties, royalty-backed debt — but vaccine deals carry several distinctive features that affect both structuring and valuation.

Cohort-Based Demand vs. Chronic Patient Pools

A therapeutic drug royalty typically depends on a patient pool that grows through diagnosis and shrinks through treatment completion, switching, or death. A vaccine royalty depends on demographic cohorts: each birth cohort entering a paediatric immunisation schedule, each age group crossing an adult recommendation threshold (e.g., Shingrix at age 50), or each season's at-risk population for influenza or RSV. This creates a more predictable volume baseline but limits the upside from market expansion — you cannot grow the birth cohort.

Government as Dominant Purchaser

For most vaccines — particularly paediatric products — the buyer is a government agency or multilateral body, not a commercial payer negotiating individually. In the U.S., the CDC's Vaccines for Children (VFC) programme and the adult immunisation schedule drive purchasing. Internationally, Gavi, UNICEF, and PAHO operate pooled procurement with pre-negotiated pricing. This means vaccine revenues are more concentrated in a small number of purchasing decisions than therapeutic revenues typically are. A single ACIP recommendation change, a Gavi co-financing transition, or a government budget cut can shift volumes materially.

In February 2026, world leaders pledged €7.7 billion ($9 billion) to Gavi for the 2026–2030 period, against a target of €10.2 billion — a shortfall partly driven by U.S. withdrawal from Gavi funding. How this gap affects procurement volumes and pricing in lower-income markets will directly influence royalty streams on vaccines sold into those channels.

Tiered Pricing Across Income Strata

Unlike specialty drugs that may sell at broadly comparable prices across high-income markets, vaccines are routinely sold under tiered pricing models that vary by country income classification. A dose of Gardasil might generate $150+ in a U.S. private-market sale but single-digit dollars in a Gavi-supported procurement. Royalty agreements sometimes exclude low-income territories entirely, apply reduced rates, or define "net sales" in ways that capture only high-income market revenue. Modelling a vaccine royalty therefore requires projecting volume and price across each tier separately — a more granular exercise than most therapeutic royalty models demand.

Longer Product Lifecycles, Lower Obsolescence Risk (Usually)

Vaccines tend to enjoy longer commercial lives than branded therapeutics. Prevnar (pneumococcal conjugate) has been on the market since 2000 and remains a multi-billion-dollar franchise. Gardasil has been generating revenue since 2006. The combination of manufacturing complexity, regulatory hurdles for biosimilar vaccines, established physician/public trust, and inclusion in national schedules creates a durable competitive position that often persists well beyond patent expiry.

That said, next-generation vaccines can displace incumbents — Vaxcyte's higher-valent pneumococcal candidates threaten Prevnar's dominance, and mRNA-based approaches may eventually compete with protein-based products across multiple categories. The risk of technological displacement, while lower than in fast-moving therapeutic areas, is not zero.

Advisory Committee Risk

No equivalent of an ACIP or JCVI vote exists for most therapeutic drugs. For vaccines, a single advisory committee decision — to add or remove a recommendation, narrow an age cohort, or prefer one product over another — can reshape the addressable market overnight. GSK's Arexvy (RSV vaccine) experienced this in 2024: a more limited ACIP recommendation contributed to lower U.S. demand compared to its launch year, a factor GSK highlighted in its annual results. Modelling advisory committee risk is inherently qualitative and adds a layer of uncertainty that therapeutic royalty models typically do not face.

Notable Vaccine Royalty Deals

Rotavirus Vaccine (RotaTeq)

In 2008, the Children's Hospital of Philadelphia (CHOP) sold its worldwide royalty interest in Merck's RotaTeq to Royalty Pharma for $182 million. One of the earliest large-scale vaccine royalty monetisations: an academic institution converting a long-duration, moderate-growth asset into immediate capital for its research foundation.

Shingles Vaccine (Shingrix)

In January 2018 — less than three months after Shingrix's U.S. launch — Agenus sold 100% of its QS-21 adjuvant royalty stream on GSK's Shingrix to HealthCare Royalty Partners for $230 million. This deal priced in blockbuster expectations before the revenue materialised. As Shingrix sales scaled (exceeding $3.5 billion by 2022), HCR earned returns supplemented by milestone payments — $15.1 million when 2019 sales crossed $2.0 billion, with further payments at higher thresholds. This is a case study in the "long tail" economics of a well-positioned vaccine royalty: Shingrix's U.S. immunisation rate was still only ~40% by Q3 2024, growing 3–5 percentage points per year, implying years of remaining penetration runway.

Pneumococcal Conjugate Vaccine (Vaxcyte's VAX-24)

In 2023, Blackstone Life Sciences paid $140 million upfront (with up to $250 million in earn-outs) to acquire a 4% royalty interest in Vaxcyte's developmental pneumococcal vaccines from Sutro Biopharma. A synthetic royalty on a pre-commercial asset — structured as a bet on Vaxcyte's ability to capture share from Pfizer's multi-billion-dollar Prevnar franchise.

HPV Vaccine (Gardasil)

GSK had received royalties from Merck's Gardasil sales under a cross-licensing arrangement dating to the resolution of earlier IP disputes between the two HPV vaccine developers. In late 2023, GSK divested the majority of these rights. The financial impact: Gardasil royalty income fell to £42 million in 2024 from £472 million in 2023. GSK's Q1 2025 aide-mémoire confirmed the Gardasil stream has effectively ceased. This illustrates how a large pharma company can use royalty divestiture to monetise a non-core asset — accepting a lump sum in exchange for a long-duration stream it no longer views as strategically valuable.

Adjuvant Technology (Novavax/Pfizer, January 2026)

Novavax licensed its Matrix-M adjuvant technology to Pfizer in a non-exclusive agreement covering up to two infectious disease areas: $30 million upfront, up to $500 million in development and sales milestones, plus tiered high mid-single-digit royalties on net sales. Royalty duration runs from first commercial sale for at least twenty years or while patents remain in force. Novavax has structured similar adjuvant licences with Sanofi (amended in September 2025 to include pandemic influenza, with up to $210 million plus mid-single-digit royalties) and with the Gates Medical Research Institute. This positions Novavax as a platform licensor generating royalty income across multiple products and partners — a model more common in enabling technologies than in traditional biopharma.

COVID-19 mRNA Patent Disputes: The Royalty Map

The COVID-19 pandemic compressed vaccine development timelines from years to months. In doing so, it bypassed the normal sequence of IP licensing that would typically precede commercialisation. Government subsidies (Operation Warp Speed, EU advance purchases) funded development directly, eliminating the need for royalty-backed financing. Some companies — notably AstraZeneca under its Oxford agreement — committed to at-cost pricing during the pandemic, deferring royalty obligations entirely.

The result was a deferred reckoning. Once the immediate crisis subsided, IP holders began asserting claims on what proved to be some of the highest-grossing pharmaceutical products in history. The aggregate settlement and litigation activity now constitutes the largest cluster of vaccine royalty disputes on record.

Settlement and Litigation Summary

The BioNTech–CureVac situation is particularly instructive. Analysts at Leerink Partners estimated that BioNTech faced the risk of court-ordered royalties on up to $32 billion in cumulative Comirnaty sales. Acquiring CureVac for $1.25 billion — plus the $870 million settlement — was effectively a structured buyout of that royalty liability, with the added benefit of internalising CureVac's mRNA manufacturing facility in Tübingen and its cancer immunotherapy pipeline. This is a rare example of IP consolidation being used explicitly to eliminate an external royalty claim.

The total potential royalty exposure across all pending mRNA vaccine litigation — if all plaintiffs were to prevail — would run into the tens of billions on cumulative Comirnaty and Spikevax revenues. In practice, most cases will settle or fail. But the aggregate picture illustrates the scale of IP claims left unresolved by the pandemic's compressed development timelines, and the new royalty streams (NIH, Penn, GSK, CureVac) that have been created through settlement.

Public Sector Dynamics

Academic and government licensors play a larger role in vaccines than in most therapeutic drug categories. The NIH and University of Pennsylvania are both IP generators and royalty recipients: Penn reported nearly $1 billion in licensing revenue in the year ended June 30, 2021, overwhelmingly from COVID-19 vaccine royalties. These institutional royalty streams — now including ongoing low single-digit royalties from BioNTech — are contractual cash flows that could in principle be monetised, just as CHOP monetised its RotaTeq royalties.

Government funding agencies such as BARDA typically negotiate supply commitments and favourable pricing rather than royalties, though there have been policy proposals for direct government royalties on publicly funded products. The Bayh-Dole march-in rights provision remains a theoretical rather than practiced tool.

On the global health side, Gavi and the Advance Market Commitment mechanism influence the commercial dynamics of vaccine sales in lower-income markets. The 2026–2030 Gavi replenishment, now operating amid reduced U.S. government participation, will shape procurement volumes and pricing. For royalty analysis, the core question is whether expanded volume in subsidised markets compensates for lower per-dose royalty income — a calculation that varies by product and agreement structure.

Outlook

New Products, New Royalty Streams

The vaccine development pipeline is broader than at any point in recent memory. RSV vaccines launched in 2023 from GSK and Pfizer. Moderna, Pfizer, and others are advancing CMV, combination respiratory, and personalised cancer vaccine candidates. Sanofi's $1.6 billion acquisition of ViceBio in 2025 — for next-generation respiratory vaccines using Molecular Clamp technology — signals continued appetite for vaccine platform M&A. Each new product may carry royalty obligations to technology licensors, creating future monetisation opportunities.

Adjuvant Licensing as a Standalone Category

The Novavax Matrix-M deals with Pfizer and Sanofi represent a potentially replicable model: a platform company generating royalty income across multiple vaccine products and partners without bearing development or commercialisation risk. If Novavax's approach succeeds, other adjuvant and delivery system developers may pursue similar licensing strategies — expanding the universe of vaccine-linked royalty assets available for financing.

mRNA IP Consolidation

BioNTech's acquisition of CureVac may mark the beginning of a consolidation phase in mRNA IP ownership. By internalising CureVac's patent portfolio, BioNTech has reduced its external royalty exposure while positioning itself as a potential licensor. Whether Moderna pursues similar IP consolidation — or continues multi-front patent battles — will shape mRNA royalty flows for years. The outcomes of remaining litigation (Moderna v. Pfizer/BioNTech, Arbutus, Alnylam, GSK, Bayer) will collectively determine how the royalty burden on mRNA vaccines distributes among patent holders, and what level of royalty stacking these products can sustain commercially.

Policy Variables

The interaction between vaccine policy and royalty economics bears monitoring. Evolving ACIP recommendation processes, FDA restructuring discussions, and the shifting Gavi funding landscape all carry second-order effects on royalty valuations. Industry commentators note that MFN-style pricing proposals, tariffs, and regulatory changes are prompting wider-range scenario modelling in deal valuations. For vaccine royalties — where government purchasing constitutes a large share of volume — these policy variables carry more weight than for most therapeutic drug royalties.

The information provided in this article is for informational and educational purposes only. The author is not a lawyer, financial adviser, or licensed investment professional. Nothing in this article constitutes investment advice, legal advice, or a recommendation to buy or sell any financial instrument. Readers should consult qualified professionals before making any investment or legal decisions.