References & Citations
Economics > General Economics
Title: Valuing Pharmaceutical Drug Innovations
(Submitted on 14 Dec 2022 (v1), last revised 13 Apr 2024 (this version, v4))
Abstract: We propose a methodology to estimate the market value of pharmaceutical drugs. Our approach combines an event study with a model of discounted cash flows and uses stock market responses to drug development announcements to infer the values. We estimate that, on average, a successful drug is valued at \$1.62 billion, and its value at the discovery stage is \$64.3 million, with substantial heterogeneity across major diseases. Leveraging these estimates, we also determine the average drug development costs at various stages. Furthermore, we explore applying our estimates to design policies that support drug development through drug buyouts and cost-sharing agreements.
Submission history
From: Gaurab Aryal [view email][v1] Wed, 14 Dec 2022 18:09:32 GMT (1273kb)
[v2] Tue, 11 Apr 2023 16:41:13 GMT (944kb)
[v3] Wed, 15 Nov 2023 14:34:06 GMT (1332kb)
[v4] Sat, 13 Apr 2024 15:10:57 GMT (945kb)
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