Research On The Valuation Of Pharmaceutical Patents Based On Binomial Tree Pricing Model Under Real Options Approach

With the continuous improvement of the quality of China’s economic development and the improvement of the people’s living standards,at the same time,the problem of population aging has become more prominent,the people’s demand for medical care is growing,and the continuous deepening and improvement of the reform of the medical and health system has made the pharmaceutical industry develop rapidly in recent years.At the same time,the annual number of new cases of tumors in China is 4.064 million,ranking first in the world.For a long time,malignant tumors will still be one of the main diseases that seriously endanger the health of the people.Therefore,many pharmaceutical companies have carried out layout research and development on anti-tumor drugs,and anti-tumor drug patents are particularly important in the fierce competition in the pharmaceutical market.It has also become the general trend of the asset appraisal industry to evaluate the patent value of anti-tumor drugs and provide more reasonable value reference for pharmaceutical companies.This article takes into account the characteristics of the pharmaceutical industry,such as high investment,high risk,high technological barriers,strict regulation and weak cyclicality,as well as the applicability of the real options approach to study the value of pharmaceutical patents,and selects the binomial tree model to empirically analyse the anti-tumour drugs of Hengrui Pharmaceutical.The article is structured as follows: firstly,the relevant domestic and international research is collated,the research direction is clarified,an appropriate research method is selected and a practical technical route is formulated;secondly,the relevant concepts such as real options and pharmaceutical patent value are explained.This is followed by an analysis of the applicability of various methods for pharmaceutical patent value assessment,which leads to the conclusion that the three major traditional valuation paths have their own shortcomings in the valuation of pharmaceutical patents,while patents contain real option features and their types are compatible with real option types,making it more feasible to use real options to assess patent value.The next section focuses on the binomial tree model based on the real options approach,explains the assumptions of the model and constructs a binomial tree model for the valuation of pharmaceutical patents and determines the relevant parameters of the model.The final analysis was conducted using Hengrui Pharmaceuticals as a case study,and the following conclusions were reached: the appraised value of Hengrui Pharmaceuticals anti-tumour drug patents under the income approach was RMB101,582,305,000,while the appraised value of the object to be valued under the real options approach was RMB158,321,585,000,which was RMB5,673,938,000 higher than that obtained under the traditional income approach,and the higher part was the quantified option value of the appraised object.The higher portion is the quantified option value of the subject.Finally,the article concludes with a summary of the findings and shortcomings of this paper,on the basis of which possible future research directions are analysed.