Dutch biopharma company - valuation of R&D

PricewaterhouseCoopers was asked to assess the value of a research and development portfolio. The purpose of this was to acquire a second-round of funding from venture capitalists. The Dutch pharmaceutical company also wanted to prioritise its R&D portfolio and get an indicative valuation of possible synergies between different projects.

The team used the PwC 'OpenFraming & trade;' methodology to evaluate risks and opportunities of the projects with the client. The projects' main uncertainties were technology performance, approval of patent applications and level of royalty percentage. Potential decisions included whether to continue or terminate ongoing projects at different times in the research phase. All the scenarios with corresponding probabilities and values were evaluated to determine the total expected value for the R&D portfolio.

The PwC team was able to demonstrate which uncertainties would have the largest impact, where management attention was required, and how to value the possible synergies from combining knowledge from each of the R&D projects. As a result, the company was able to prioritise its R&D projects and decide the areas to focus on.

"The interactive, real options approach that PwC used for the valuation of our R&D portfolio has helped us in focusing our R&D strategy and prioritising the individual R&D projects. This increased our chance of acquiring funding for our R&D portfolio."

CEO, Dutch biopharmaceutical company.