Patent Cliff Pharma

BMY 7x earnings, PFE post-COVID: market overprices patent cliffs by 2-3x

Patent Cliff Pharma Value 4Y (2022-2025)

Total Return

+28.5%

Sharpe Ratio

0.27

Max Drawdown

-14.1%

Win Rate

50.7%

Alpha

-4.4%

Comp. Score *

0.06

Risk Parameters

Max Allocation5.3%

Stop Loss16.9%

Take Profit5.0%

Max DD Tolerance14.1%

Rebalanceweekly

Execution Guidance

Order TypeLimit

Entry Rule0.5% below current price for buys

TimingSAFE TO BUY. *

ScalingEnter in 3 tranches over 1-2 weeks to average in

Positions — Vol-Adjusted Sizing

Symbol	Action	Vol	Stop Loss	Take Profit	Size	Links
TAK	BUY	20%	14.0% below entry	4.1% above entry	6.4%	TV YH

▶ For Passive Investors (Buy & Hold)

This strategy has moderate long-term potential but requires more active monitoring than a pure passive approach. Entry: Wait for a pullback before entering. Buy in 3 tranches over 2-4 weeks to average your entry price. Rebalance: Check monthly. This strategy is more volatile and needs closer attention. Exit rules: - Take profit: Rebalance when any position exceeds 2x its target weight. Trim back to target, redeploy to underweight positions. - Stop loss: NO price-based stop loss. This strategy recovered from -17% drawdown to return 84% over the long term. Stopping out would have locked in losses. - Exit rule: Exit if pipeline drug fails Phase 3 AND no M&A replacement announced within 6 months. Without new drugs, the cliff is real.

Avg 5Y Return

46.1%

Avg 5Y Sharpe

0.33

Avg 5Y Max DD

-16.2%

10Y Return (2015-2024)

84.0%

10Y Sharpe

0.23

10Y Max DD

-16.8%

HODL Composite

0.34

Windows Tested

Consistency

78%