Valuation in Life Sciences: A Practical Guide (Hardcover) by Boris Bogdan




This book is the first complete guide to valuation in life sciences for industry professionals, investors, and academics. Boris Bogdan and Ralph Villiger introduce the characteristics of drug and medical device development, explain how to translate these into the valuation, and provide valuable industry data. After guiding the reader through the theory of valuation, including DCF, decision trees, and real options, the authors demonstrate how to value projects, patents, licences, firms, and stocks on real-life examples, even treating complex licence and company structures. Special emphasis is put on the practicability of the proposed methods by including many hands-on examples, without compromising on realistic results.
The 3rd edition of the successful work includes new studies about success rates and about drug development in the biotech industry and their influence on valuation.



Content Level » Professional/practitioner

Product details

• Hardcover: 370 pages
• Publisher: Springer; 3rd ed. edition (29 April 2010)
• Language English
• ISBN-10: 3642108199
• ISBN-13: 978-3642108198

Introduction................................................................................................1
The Life Sciences Industry .....................................................................2
Academia............................................................................................2
Biotech................................................................................................3
Pharma................................................................................................4
Valuation ................................................................................................5
The Role of Valuation ........................................................................5
Current Problems in Valuation ...........................................................6
Basics of Valuation...................................................................................11
Introduction ..........................................................................................11
Fundamentals........................................................................................11
Cash Flows .......................................................................................11
Discounting.......................................................................................13
Valuation Methods ...............................................................................29
Discounted Cash Flows Valuation ...................................................29
Decision Tree....................................................................................32
Real Options .....................................................................................36
Difference Between Real Options and Financial Options................59
Valuation of Financial Options.........................................................60
Valuation in Life Sciences .......................................................................67
Fundamentals........................................................................................67
Drug Development ...........................................................................67
Medical Device Development and Approval ...................................70
Cost...................................................................................................72
Success Rates....................................................................................74
Time..................................................................................................76
Peak Sales.........................................................................................77
X Table of Contents
Discounting.......................................................................................96
Volatility.........................................................................................100
Project Valuation ................................................................................103
Project Valuation: DCF ..................................................................105
Project Valuation: Decision Tree ...................................................113
Project Valuation: Real Options.....................................................121
Simulations of Projects...................................................................134
Sensitivity Analysis and Sensitivity-Simulations...........................143
License Contract Valuation ................................................................146
Fundamentals of Licensing.............................................................146
Valuation of License Contracts: DCF ............................................152
Valuation of License Contracts: Real Options ...............................160
Advanced Topics in Project and License Contract Valuation ............169
Early-Stage Licensing with Possible Sublicensing.........................169
Simulation of License Contracts.....................................................194
Discovery and Preclinical License Deals: What’s Realistic? .........195
How to Read a Deal........................................................................197
The Virtual Company Model..........................................................201
Negotiating License Deals..............................................................208
Valuing License Contracts with Multiple Indications ....................218
Valuing Projects with Multiple Markets ........................................232
Technology Valuation and Feed Rate.................................................233
IP Valuation........................................................................................235
Pipeline Valuation ..............................................................................243
Portfolio Management ........................................................................245
Introduction ....................................................................................245
Qualitative Approaches ..................................................................247
Quantitative Approaches ................................................................248
Optimal Portfolio Structure ............................................................250
Company and Stock Valuation ...........................................................255
Introduction to Company Valuation ...............................................255
Theory ............................................................................................258
Interpretation of Valuation Results.................................................273
Simulation on Company Level .......................................................275
Case Company Valuation ...............................................................275
Stock Valuation ..............................................................................278
Advanced Company Valuation.......................................................284
Mergers and Acquisitions...............................................................290
Other, Less Serious Approaches.....................................................293
Table of Contents XI
Exercises .................................................................................................305
Introduction ........................................................................................305
Exercises.............................................................................................305
Solutions .............................................................................................311
Case Studies............................................................................................331
Introduction ........................................................................................331
Case Study 1 .......................................................................................331
Case Study 2 .......................................................................................338
Case Study 3 .......................................................................................346
Case Study 4 .......................................................................................354
References...............................................................................................363
Index........................................................................................................365