Concept—Integrated Valuation Model

Abstract

Many biotech companies are focusing on the development of innovative drugs for the treatment of orphan diseases or oncology drugs with orphan indication, which are considered “very expensive” by healthcare authorities. These biotech companies need support for developing the optimal pricing strategy for their drug in order to maximize the economic value from an investor’s perspective. Investors also require validation of the economic value of R&D project to avoid an inappropriate investment decision. Therefore we developed an Integrated Valuation Model, which allows early phase assessment of the pricing potential of the drug for various positioning strategies and the corresponding economic value for the investor. The Integrated Valuation Model is especially developed for innovative drugs for the treatment of orphan diseases or oncology drugs with orphan indication. A late phase application is the support of justification of “high” drug price during price negotiations with national health authorities, especially when the drug price exceeds incremental cost effectiveness ratio, e.g. €80,000 per QALY and authorities require huge discounts up to 80%.