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Value-Based Management in Biosciences Research and Development


  • Gill Eapen


In industries such as biosciences, the range of uncertainty and managerial flexibility make traditional financial analysis such as discounted cash flow and decision tree analysis largely irrelevant for strategic decision-making. In place of such traditional methods, this article proposes the use of decision options analysis, a real-options-based methodology that holds out the promise of better investment and portfolio decisions with "fewer" data requirements. Moreover, decision options analysis can be implemented with software tools that allow systematic application of these techniques. This article presents case studies that outline the actual application of real options analysis in licensing transactions and portfolio management in biosciences companies. 2005 Morgan Stanley.

Suggested Citation

  • Gill Eapen, 2005. "Value-Based Management in Biosciences Research and Development," Journal of Applied Corporate Finance, Morgan Stanley, vol. 17(2), pages 105-112.
  • Handle: RePEc:bla:jacrfn:v:17:y:2005:i:2:p:105-112

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