Dividend Yield: 8.9%
There’s no denying that PDL BioPharma (NASDAQ:PDLI) is conceptually one of the coolest biotech-esque ideas out there. The company buys rights to sell revenue-bearing drugs, and passes along a piece of its royalty income to shareholders. In fact, with a current dividend yield of nearly 9%, PDLI is one of the most income-oriented biopharma names out there.
There’s just one problem: That income stream is in serious jeopardy.
Like most other pharmaceutical companies right now, PDL BioPharma has too many of the drugs under its umbrella racing toward the patent cliff. Avastin, Herceptin, Lucentis and Tysabri make up 95% of the company’s total sales. Though most of 2013’s revenue should be decent, its four top-selling drugs will have lost their patent protection by 2014.
Yeah, PDL can always go out and buy or develop more revenue-bearing drugs. But that’s far easier said than done right now.