Yes—this fund requires pharmaceutical companies to generate the IP in the first place, and also to sell the successful drugs. A new pharmaceutical company will face the same risk profile as existing pharmaceutical companies; I would be very surprised if one could suddenly start investing according to the opposite pattern the others use.
On the other hand, I don’t see any reason why an existing pharmaceutical conglomerate could not employ this strategy or a similar one. They already have a huge amount of IP laying around undeveloped (it is from them a fund like this would acquire it) and other huge companies like General Electric have deliberately explored financial engineering as a corporate strategy. It failed in that case, but in this one we are just talking about supplementing the core strategy rather than replacing it.
Is this very different from founding a pharmaceutical company?
Yes—this fund requires pharmaceutical companies to generate the IP in the first place, and also to sell the successful drugs. A new pharmaceutical company will face the same risk profile as existing pharmaceutical companies; I would be very surprised if one could suddenly start investing according to the opposite pattern the others use.
On the other hand, I don’t see any reason why an existing pharmaceutical conglomerate could not employ this strategy or a similar one. They already have a huge amount of IP laying around undeveloped (it is from them a fund like this would acquire it) and other huge companies like General Electric have deliberately explored financial engineering as a corporate strategy. It failed in that case, but in this one we are just talking about supplementing the core strategy rather than replacing it.