Reaserch On The Method Of Valuation Of Non-listed Pharmaceutical Companies

The pharmaceutical industry is an important part in not only our economy but also our ordinary life. Cause it is the key issue to our people’s healthy, and it play a very important role in the national economy and national economic growth. Currently, on the whole, the pharmaceutical industry runs rapidly and smoothly, but as there are so many loss-making enterprises within the industry that there is a phenomenon of differentiation. Under the background of the China’s economic restructuring and upgrading. Providing the fair value of pharmaceutical companies, on the one hand can help the operators recognize the intrinsic value of the enterprise, on the other hand, provides a basis for the investors. It would be benefit to master or adjust the direction of the company for, and also make it easy to measure the corporate’s growth.It has nearly three decades for China’s asset valuation industry, still starts late comparing to the foreigner’s. Most of t the valuation methods we using now, draw on the advanced experience of foreign company. We are still less experience when combine those methods with national enterprises, especially with non-listed pharmaceutical companies. There still lack of some practical experience.The relative valuation method and intrinsic value method are two popular methods in the current asset valuation, including discounted cash flow model, dividend discount model and earnings, book value models. And from the perspective of asset valuation, there is the method of asset base.Based on the description of these theory and the characteristics of China’s pharmaceutical manufacturing enterprises, the paper selects discounted free cash flow to assess the value of non-listed pharmaceutical companies. Through a detailed discussion of non-listed pharmaceutical companies’ valuation process, explaining the rationality of its application.The first part of the paper describes general background, significance and research ideas. The second and third part describes the theoretical literature and research on the value and methods of the enterprise. There is also a description of the situation of development of the pharmaceutical industry in the third part. The part two and three introduce theory of the domestic and foreign enterprise valuation and the method. In the fourth part, there is analysis on choosing the suitable method for enterprise value evaluating, combining with the development status and characteristics of the pharmaceutical industry. The article regards the income method as the basic method for valuation. Based on the analysis of three models in the income method, the article considers the discounted cash flow model more suitable for non-listed pharmaceutical companies. With the combination of real case of equity transfer of non-listed pharmaceutical company, named M, the fifth discusses the detail process of calculating enterprise’s valuation applying discounted cash flow model. Then the last part, there is an explanation that the discounted cash flow model is reasonable by comparing with the asset based approach, and the result shows that it is reasonable to use the discounted cash flow model for non-listed pharmaceutical company.