ABSTRACT
Values change day by day as the circumstances of an owner and a possible buyer vary. However, there is frequently still some uncertainty that this really reflects the value because, certainly in a licensing transaction. In a negotiation the final price will be what the partner is willing to pay. The most commonly used analysis tool in business development is the Net Present Value (NPV) calculation. Mathematical algorithms are used to help the traders guess by providing the trend in probability data. This is applicable in stock trading but using these algorithms in pricing pharmaceutical assets is rather questionable, not least because the method overstates some aspects of the model and ignores others. In the development of healthcare products, and in particular medicines, a company which has a high income and many assets is able to borrow money from banks as they have a positive credit rating and because the risk of default of repayments is low.
