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Value drivers of development stage biopharma companies

Author

Listed:
  • Daniel Tobias Michaeli

    (Heidelberg University
    Heidelberg University
    Technical University of Munich)

  • Hasan Basri Yagmur

    (Technical University of Munich)

  • Timur Achmadeev

    (Technical University of Munich)

  • Thomas Michaeli

    (Heidelberg University
    Heidelberg University
    German Cancer Research Center (DKFZ))

Abstract

Objective Scholars previously estimated research and development (R&D) costs of the internal drug development process. However, little is known about the costs and value arising from externally acquired therapeutics. This study identifies and estimates the magnitude of factors associated with Biopharma acquisition value. Methods SDC Thomson Reuter and S&P Capital IQ were screened for majority acquisitions of US and EU Biopharma companies developing new molecular entities for prescription use (SIC code: 2834) from 2005 to 2020. Financial acquisition data were complemented with variables characterizing the target’s product portfolio extracted from clinicaltrials.gov, Drugs@FDA database, US SEC filings, and transaction announcements. A multivariate regression assesses the association of firm value with extracted variables. Results 311 acquisitions of companies developing prescription drugs were identified over the study period. Acquirers paid 37% (p

Suggested Citation

  • Daniel Tobias Michaeli & Hasan Basri Yagmur & Timur Achmadeev & Thomas Michaeli, 2022. "Value drivers of development stage biopharma companies," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(8), pages 1287-1296, November.
    • Handle: RePEc:spr:eujhec:v:23:y:2022:i:8:d:10.1007_s10198-021-01427-5
    DOI: 10.1007/s10198-021-01427-5
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    References listed on IDEAS

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    1. DiMasi, Joseph A. & Grabowski, Henry G. & Hansen, Ronald W., 2016. "Innovation in the pharmaceutical industry: New estimates of R&D costs," Journal of Health Economics, Elsevier, vol. 47(C), pages 20-33.
    2. Michael Schlander & Karla Hernandez-Villafuerte & Chih-Yuan Cheng & Jorge Mestre-Ferrandiz & Michael Baumann, 2021. "How Much Does It Cost to Research and Develop a New Drug? A Systematic Review and Assessment," PharmacoEconomics, Springer, vol. 39(11), pages 1243-1269, November.
    3. Re‐Jin Guo & Baruch Lev & Nan Zhou, 2004. "Competitive Costs of Disclosure by Biotech IPOs," Journal of Accounting Research, Wiley Blackwell, vol. 42(2), pages 319-355, May.
    4. Andy Heughebaert & Sophie Manigart, 2012. "Firm Valuation in Venture Capital Financing Rounds: The Role of Investor Bargaining Power," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 39(3-4), pages 500-530, April.
    5. Zheng, Yanfeng & Liu, Jing & George, Gerard, 2010. "The dynamic impact of innovative capability and inter-firm network on firm valuation: A longitudinal study of biotechnology start-ups," Journal of Business Venturing, Elsevier, vol. 25(6), pages 593-609, November.
    6. Jonathan Dando & Maximilian Lebmeier, 2020. "A novel valuation model for medical intervention development based on progressive dynamic changes that integrates Health Technology Assessment outcomes with early-stage innovation and indication-speci," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-28, December.
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    Cited by:

    1. Varshney, Mayank & Jain, Amit, 2023. "Technology acquisition following inventor exit in the biopharmaceutical industry," Technovation, Elsevier, vol. 126(C).
    2. Michaeli, Daniel Tobias & Mills, Mackenzie & Kanavos, Panos, 2022. "Value and price of multi-indication cancer drugs in the USA, Germany, France, England, Canada, Australia, and Scotland," LSE Research Online Documents on Economics 115720, London School of Economics and Political Science, LSE Library.
    3. Daniel Tobias Michaeli & Mackenzie Mills & Panos Kanavos, 2022. "Value and Price of Multi-indication Cancer Drugs in the USA, Germany, France, England, Canada, Australia, and Scotland," Applied Health Economics and Health Policy, Springer, vol. 20(5), pages 757-768, September.

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