Discount rates in drug development
January 26, 2011
Together with AVANCE, BIOSTRAT Biotech Consulting has completed an analysis in which it is determined which discount rates industry professionals in pharma and biotech are applying when doing financial valuations in drug development.
The 242 respondents in the survey are widely distributed across the key biotech industry stakeholder groups in biotech/pharma valuations (consultants, bankers, investors, biotech and pharma professionals).
The respondents were presented with three case companies, all biotech companies within cancer drug development but in different stages: One early-stage company where the lead drug candidate is in pre-clinical development, one mid-stage company where the lead candidate is in Phase III, and finally a late-stage company where the lead candidate is in Phase III.
The average discount rates applied to these three cases are:
- Early-stage: 23.7 %
- Mid-stage: 17.4 %
- Late-stage: 14.6 %