Valuing Pharmaceutical Drug Innovations
Fuente:
arXiv
Salvato in:
| Autori principali: | , , , |
|---|---|
| Natura: | Preprint |
| Pubblicazione: |
2022
|
| Soggetti: | |
| Accesso online: | |
| Tags: |
Aggiungi Tag
Nessun Tag, puoi essere il primo ad aggiungerne!!
|
| _version_ | 1866909023599591424 |
|---|---|
| author | Aryal, Gaurab Ciliberto, Federico Farmer, Leland E. Khmelnitskaya, Ekaterina |
| author_facet | Aryal, Gaurab Ciliberto, Federico Farmer, Leland E. Khmelnitskaya, Ekaterina |
| contents | We propose a methodology to estimate the market value of pharmaceutical drugs. Our approach combines the event study method with a discounted cash flow model that infers drug values from stock market responses to drug development announcements. We estimate the average value of a drug developed by small firms (those below the 95th percentile of market capitalization) to be \$2.16 billion. At the preclinical stage, the risk-adjusted and present discounted average net value of drugs is \$50 million. Leveraging these estimates, we also determine the expected drug development cost at the start of the discovery stage to be \$38 million. We estimate values and costs for several therapeutic areas (e.g., neoplasm, infections) and explore applying these estimates to design policies that support drug development through drug buyouts and targeted preclinical interventions. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2212_07384 |
| institution | arXiv |
| publishDate | 2022 |
| record_format | arxiv |
| spellingShingle | Valuing Pharmaceutical Drug Innovations Aryal, Gaurab Ciliberto, Federico Farmer, Leland E. Khmelnitskaya, Ekaterina General Economics Economics We propose a methodology to estimate the market value of pharmaceutical drugs. Our approach combines the event study method with a discounted cash flow model that infers drug values from stock market responses to drug development announcements. We estimate the average value of a drug developed by small firms (those below the 95th percentile of market capitalization) to be \$2.16 billion. At the preclinical stage, the risk-adjusted and present discounted average net value of drugs is \$50 million. Leveraging these estimates, we also determine the expected drug development cost at the start of the discovery stage to be \$38 million. We estimate values and costs for several therapeutic areas (e.g., neoplasm, infections) and explore applying these estimates to design policies that support drug development through drug buyouts and targeted preclinical interventions. |
| title | Valuing Pharmaceutical Drug Innovations |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2212.07384 |