Valuing a Healthcare / Pharmaceutical Company

Learn advanced techniques that can be utilised in assessing the valuation of healthcare companies.

The delicate wings of a monarch butterfly on a pink flower

A one-day course

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Download: Course Category Brochure | Course Outline

Part One

Session 1

Defining the nuances of healthcare companies:
- Types of healthcare companies
  - Biotech
  - Pharmaceuticals
  - Medical devices
  - Diagnostic tools
- R&D and upfront spend
Handling unknowns in healthcare business valuation:
- Regulatory risk
- Clinical trial risks
  - Patient enrolment
  - Finding the right endpoints
- Risk adjustments
  - Using probabilities of success
- Summary of medical business valuation techniques which could be applied
  - DCF
  - Trading Comps
  - Transaction Comps
  - Cost of capital and discount rate
- Considerations for valuing early stage clinical / biotechnology companies
  - Phases of Drug Development & Probability of Success
  - Patent life
  - Loss of exclusivity
Case study example of valuing a clinical (early) stage biotechnology company [On screen follow along exercise]

Session 2

Valuing start-up biotechnology company

Key clusters for start-up biotechnology companies:
- University spin-offs
- Big Pharma R&D spin-offs
Lifecycle of biotech companies:
- Different stages of development and commercialisation
  - Discovery
  - Clinical development
  - Peak penetration
  - Loss of exclusivity
- Clinical trials
  - What is key?
    - Efficacy profile
    - Safety profile
    - Regulatory labelling
  - Valuation issues
    - How to value know-how and R&D
    - Impact of cash burn
    - Estimating market size
    - Inherent problems of using the DCF model
    - Apply peak sales multiples

Case study example of valuing a start-up biotechnology company [On screen follow along exercise]
- DCF derived valuation
- Problems with peak-sales multiple analysis
- Competitive dynamics
  - How do we know if we have the better product?
  - Mechanisms of action

Part Two

Session 1

A map of some of the key players in healthcare (Pharmaceuticals):
- Major therapeutic areas in development
  - Oncology
  - Infectious diseases
  - Neurology
  - Haematology
  - Endocrinology
  - Respiratory
  - Dermatology
  - Cardiovascular
  - Psychiatry
  - Ophthalmology
  - Rheumatology
  - Others
- Key pharmaceutical valuation drivers
  - Financials
  - M&A for brand/product acquisitions
    - Buy-and-build
    - Multiple arbitrage
  - Nature of commercialised products
    - OTC
    - Generics
    - Specialty Pharmaceuticals
  - Understanding the commercialisation strategy
    - Own sales force
    - Out licensed
    - Cost and margin impacts from commercialisation strategy

Case study example of a bolt-on acquisition and using multiple arbitrage to create value [On screen follow along exercise]

Session 2

Understand the peak revenue opportunity:
- Links to Epidemiology (disease prevalence and stratifying patient populations)
- Peak penetration
- Price per year
Building blocks for a pharmaceutical/biotech SOTP (Sum Of The Parts analysis):
- DCF on a product-by-product basis
- Other sources of tangible value (land, FDA priority review vouchers and others)
- Allocation of central overhead costs
Case study example of valuing a commercial-stage pharmaceutical company [On screen follow-along exercise]:
- Royalty revenue streams and monetisation
  - What is royalty financing?
  - Emergent trends and TA focus areas for royalty financing
  - Key counterparties engaged in biopharma royalty financing
  - Types of licensing opportunities (horizontal vs vertical)
  - Tail and Cap provisions
Case study example of valuing a royalty consideration [on screen follow along exercise]

Redcliffe’s pharmaceutical and healthcare business valuation trainer is a highly accomplished professional with an exceptional track record of performance in various sell-side and buy-side roles.

He began his career at Citigroup's Industrials team in London, gaining extensive experience in M&A and capital markets activities. The trainer contributed to numerous pitches and transactions, specialising in diversified industries: including automotive, aerospace & defence, and metals & mining sectors. Driven by his passion for US biotech investments, He joined Rothschild & Co. in a senior position, providing strategic financial advice to clients in the healthcare industry. His deep understanding of the sector enabled him to navigate complex challenges and identify lucrative opportunities.

Seeking to broaden his investing experience, the trainer entered portfolio management and investment analysis at Redline Capital Partners, focusing on long/short public equities. This allowed him to enhance his sector expertise and make informed investment decisions. In 2019, the trainer launched his own proprietary trading firm, Third Wave Capital, specialising in investments in US healthcare and technology sectors. Additionally, he has actively invested in Indian public equities and commodities for over a decade, collaborating with his family's investment endeavours.

Our pharmaceutical company valuation trainer holds a Bachelor of Science (Hons) degree in Accounting & Finance from the University of Warwick, which has strengthened his financial knowledge and capabilities. With his wealth of experience and deep industry passion, He is highly regarded for his analytical skills, strategic thinking, and commitment to delivering exceptional results. He also provides training and consulting services to academic institutes and financial institutions, earning praise for his ability to deliver value to delegates with varying experience levels.

Gain a thorough review of the practical valuation of healthcare companies and valuing pharmaceutical companies.
Analyse the financial and operational nuances of healthcare businesses, including high R&D costs, regulatory hurdles, and the impact of patent exclusivity.
Master advanced valuation techniques such as Discounted Cash Flow (DCF), Trading Comps, and Transaction Comps, with emphasis on cost of capital and discount rate considerations.
Apply valuation methodologies to different company stages, from early-stage biotechnology to commercial-stage pharmaceutical companies.
Navigate challenges in valuing early-stage and start-up biotechnology companies, addressing clinical trial risks, patient enrolment challenges, and uncertainties in drug development.
Examine the lifecycle of biotech companies, including discovery, clinical development, peak penetration, and loss of exclusivity.

Delivered online to maximise the use of time and flexibility in terms of delivery.
Understand the Biotechnology / Pharma company valuation niche and the appropriate company valuation techniques.
Identify industry-specific metrics (Peak sales, patient population stratification, probability of success.)
Evaluate a range of valuation metrics for healthcare companies.
Practical examples of real healthcare business valuation.

Redcliffe Training’s Valuing a Healthcare / Pharmaceutical Company has been designed to provide a comprehensive review of practical valuation techniques for healthcare businesses.

Delivered over 2 half-days; this course focuses on assessing pharmaceutical companies and their specific valuation drivers. With extensive use of real-world examples, participants will gain hands-on experience in valuing healthcare companies, analysing industry metrics, and tackling valuation challenges.

The ‘Valuing a Healthcare / Pharmaceutical Company’ training was one of the most beneficial sessions I have ever attended. The lecturer, a top-notch industry professional, was exceptionally bright and knowledgeable. And he addressed all tricky questions passionately.
An abundance of brilliant materials was provided.
I extend my gratitude to Redcliffe's team for selecting such top-talented lecturers, structuring materials perfectly, and organizing everything seamlessly.