Valuation methods and discount rates in drug development

Nicolaj Højer Nielsen is a serial entrepreneur, business angel and founder of Biostrat Biotech Consulting Aps . Nicolaj has for the last twenty years been building (and investing in) startups within biotechnology, medtech and IT. He lectures on Entrepreneurship at Copenhagen Business School and is the author of the Startup Funding book. Nicolaj holds an MBA from INSEAD and an MSc in Marketing from Copenhagen Business School.

Background of the new survey on biotech valuation methods: In 2010 Nicolaj conducted a large (n=400) study on valuation methods (NPV vs. rNPV etc.) and discount rates in biotech and pharma projects. The results were published in two whitepapers (“valuation methods in biotechnology” and “discount rates in drug development”). The results from these whitepapers have become important sources for many when doing financial valuations in biotech/pharma. But a lot have happened since – including that the cost of capital (WACC) might have changed and the biotech industry have matured. In mid 2020 Nicolaj therefore decided to do a follow-up study. The new study focuses on valuation methods and discount rates for drug development projects.