Pharma Biotech Valuation Model Template

This Pharma Biotech Valuation Model Template in Excel calculates the risk-adjusted DCF Value of a Pharma, Biotech or other type of Life Science Company with several products under development. The product forecasts are probability adjusted to take into account the success probabilities at different stages of product development and clinical trials. The model also allows to calculate the required funding amount and simulates the calculated returns from a financial investor point of view during a fund-raising exercise.

This is an ideal Excel model to better understand your pharma or biotech business, if you are juggling with different products, need to analyze them in detail and need to understand the effects of various development scenarios on the valuation. This financial model template allows you to run a variety of simulations by including products in the consolidated forecast or removing them (ON/OFF Switch), adjusting their probabilities, timing, revenue, cost and investment assumptions.

This video provides an overview about the financial model template:

 

The highlights of this financial model template are the following:

  • Detailed product forecasts for up to 10 products:
    • Revenue forecast based on key value drivers such as market size, market share, pricing, market growth and inflation rates
    • Possibility to model two different pricing periods per product to account for the effect when pricing changes due to patent expiration
    • Product can either be manufactured and sold or licensed to somebody else (licensing income via a Royalty Rate)
    • Forecast of expected costs and investments required per product
    • R&D expenses can either be capitalised or expensed as per Switch chosen
    • Free Cash Flow forecast per product
    • All financial projections can adjusted for their probability of success
    • Risk Adjusted DCF Valuation per Product
    • Project IRR Calcuation per Product
  • Consolidated Financial Forecast for the Company
    • Three Statement Model with forecasted Income Statement, Balance Sheet and Cash Flow statement
    • Consolidated Risk-Adjusted DCF Valuation based on the probability weighted forecasts of all products included in the scenario
    • Calcuation of required funding amount
    • Project IRR calculation for the company as a whole
    • Debt Schedule with 2 layers of financial debt
    • Forecasted Financial Ratios
  • Executive Summary which summarizes the results and assumptions of this financial model
    • Main Assumptions
    • Key figures
    • Charts
    • Breakdowns of Revenues and EBITDA
    • Breakdown of the Company’s Risk Adjusted DCF Valuation by product
    • Switch to include/exclude every product in the forecast as needed for the desired scenario
  • Fundraising scenarios
    • Calculation of required Funding Amount for eventual fundraising exercise
    • Table with Uses and Sources of Funding
    • Pre-/Post Money valuation based on required funding and equity stake offered
    • Investor IRR Calculation based on cash in / cash out calculation from an investor’s point of view
    • Sheet with instructions how to use the model

 

 

We hope this financial model template can provide an useful framework to improve the analysis and financal decision making when evaluating different product development scenarios for a pharma or biotech company with products under development.

This model is aimed for advanced users, familiar with MS Excel and Life Science Valuation Methods. The model (Version 1.3) is available as follows:

  • Full Excel Model: 11 Products / 25 Year Financial Forecast Period
  • Light Version Excel Model: 5 Products / 10 Year Financial Forecast Period

Both versions are available as free PDF Demo versions as well.

 

Below screenshots are from the full Excel Model (11 products / 25 years forecast period)

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Summary The Pharma Biotech Valuation Model Template calculates the risk-adjusted DCF Value of a Pharma or Biotech Company with several products under development. The product forecasts are probability adjusted to take into account the success probabilities at different stages during the product development stages and simulates the effect on the company's valuation. The model also allows to calculate the required funding and simulates the calculated returns from a financial investor point of view during a fund-raising exercise.
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