Research On The Applicability Of Feltham-ohlson Model In Pharmaceutical Industry Valuation

Pharmaceutical industry is an important part of national economy and it has a great relationship with people's livelihood.In recent years,the policy reform provide relatively free political environment for Mergers and Acquisitions of pharmaceutical enterprise.In 2016,over 400 Mergers and Acquisitions happened around pharmaceutical company.With the property right changed frequently,valuation of pharmaceutical company need to be more accurate and reasonable.The value of the corporation depends on how the appraisers see the industry,the corporations' financial status,the corporation growth and so on.Besides,what method the appraisers take will also affect the final results.So,it is necessary to find the appropriate method to get the real intrinsic value.Feltham-Ohlson model is an effective way to get the value with financial data.In this paper,the author introduce the Feltham-Ohlson model in detail and choose one form to take an empirical test.The data is listing medical companies from 2008 to 2015.In the test,I take three ways,Intercept,PEG and Size,to replace the �other information�.I find that the model with intercept and size can apply to evaluate the pharmaceutical corporation.Then I use the model to calculate the value of every company and analyze the difference between the market price and the estimated value to compare results.In the last,I summarize what have got in the empirical analysis and look into what research need to be taken in the future.The studies on methods of enterprise valuation have been taken by many scholars.Studies have shown that different industry has its own effective methods.This paper analyzes how Feltham-Ohlson can apply to value the pharmaceutical enterprise,which enrich the ways to value pharmaceutical company.It is meaningful to find the pharmaceutical companies' value accurately...