S&P Global Ratings assigned a corporate credit rating of B+ to Innoviva Inc. with a stable outlook.
The rating agency said the corporate credit rating takes into account the company's high dependence on its respiratory drug Breo, which accounted for 88% of its revenues in 2016; its limited size, scale and scope of operations; and its need for acquisitions to propel growth.
S&P said these weaknesses are offset to some extent by the company's high margins provided by its pharma royalty driven model and its partnership with GlaxoSmithKline plc. The agency views Innoviva's collaboration and strategic alliance with GSK as a credit positive, given GSK's leading position in the respiratory market and its high level of expertise and expected commitment to the market.
The rating agency said the stable outlook reflects its expectation that Innoviva's major respiratory treatment will keep gaining market share and that leverage will remain at around 4x for the near term.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.