Study On The Value Evaluation Of New Drugs Inresearch Based On Binary Tree Model

Since the outbreak of COVID-19 in late 2019,it has had a huge impact on countries around the world.Countries gradually began to pay attention to the research of new drugs.However,due to the long periodicity and continuous investment in the whole process of new drug in research,enterprises need to adjust their internal investment decisions in real time according to the changes of internal conditions and external market conditions in the whole process of new drug in research.For example,many enterprises have to look for external ways in the process of new drug in research,such as external capital,new funds,merger with other enterprises,direct merger or transfer of new drugs in research,which brings huge demand and higher requirements for the value evaluation of new drugs in research.However,the whole pharmaceutical asset evaluation in China started late,there are few cases of new drug evaluation transactions,and the market environment is not perfect,leading to the market method,cost method,revenue method and other traditional methods can not meet the current value evaluation of new drugs.Traditional approaches to evaluating new drugs in research ignore the benefits that uncertainty can bring to the enterprise and the value of management flexibility.Firstly,in the process of new drugs in research,the underlying asset and option strike prices change all the time.Secondly,at the end of each trial stage in the whole research cycle of new drugs,the management has the decision-making power to make the investment choice of the next stage based on the results of the trial and the prediction of the future market.Therefore,the value of management flexibility should be fully considered in the evaluation of new drug in research.In this thesis,the binomial tree model of real option method is used to evaluate the value of new drugs in research,which fully considers the uncertainty in the process of new drug in research.Management flexibility in the process of new drug in research is regarded as a kind of real option,and the value of management flexibility is the value of real option.This thesis analyzes the relevant theories and value influencing factors of new drugs in research,and combined with the characteristics of new drugs in research and value evaluation characteristics,it is believed that the binary tree model of real option method is more suitable for the value evaluation of new drugs in research.The binary tree model itself has many advantages: its structure is very simple,has a certain form of free cash flow;The logic is easy for evaluators to understand,the calculation process is transparent,and the real option can be easily handled without advanced mathematical ability;It is suitable for the operation of multi-stage evaluation project,which overcomes the limitation of the three traditional evaluation methods.Easy for report users to understand,etc.In this thesis,binomial tree model was introduced specifically to estimate the value of the new drug after it was launched on the market through the improved discounted free cash flow model,and the key parameters of the binomial tree model were calculated,that is,the value of the successful development of the new drug after it was launched on the market.Then,by using real option binary tree model,the value of successful drug development to market is backward to the value of new drug development in each stage,and then the value of evaluation base date is evaluated.In this process,first of all,give up traditional forecast revenue method is proposed on the basis of financial statements,improvement based on the new drug in research enterprise special patient pool,permeability,pharmaceutical patent and administrative protection,product pricing,and special value of the research and development success rate of the five factors of new drugs in development future revenue forecast;Secondly,the life cycle prediction theory is used to make the division of income years more reasonable,more close to the actual situation in the evaluation;Thirdly,bloom model is used to improve the β coefficient and the average return rate of capital market and the improved discount rate of market risk premium are reasonably calculated by using China’s stock market.Finally,using the institutional research data to reasonably estimate the success rate of each stage of new drugs in research,and then using the binary tree model to evaluate the value of new drugs in research.In this thesis,the binary tree model in the evaluation of new drug research was to explore,trying to use real options method of the binary tree model for application in new drug evaluation research of more scientific,rationalization and standardization,for the new crown vaccine and new drugs in research and development project evaluation provides a certain reference value,and to a certain extent,improve the system of new drugs in research real option pricing method.It enriches the valuation methods of assets such as new drugs in research.