The Research Of Enterprise Value Assessment About Pharmaceutical Company In Mergers And Acquisitions

The pharmaceutical industry is an important part of our national economy.If you want to capture investment opportunities in the pharmaceutical industry,the correct understanding of the intrinsic value of pharmaceutical companies,and an appropriate evaluation method is very important.For the valuation of pharmaceutical companies,since such companies have a large portion of the assets are intangible assets,if we choose the cost method,the enterprise value is undervalued.Because pharmaceutical company is individual differences,if we choose the market approach,it is difficult to find a comparable enterprises and more difficult to determine analogy indicators.If we choose the traditional income approach,it will underestimate the value of the firm's future growth,thus,it is difficult to reflect the true intrinsic value of the business.The real option rule that business should be worth the discounted value of the current assets and the present value of the project's future growth and opportunities.In this paper,we combine B-S DCF method and the option pricing method,the M & A cases were analyzed to determine the applicability of the joint use of these two assessment models for investors.Based on the characteristics of pharmaceutical industry,this paper combined traditional DCF method with the option pricing method to measure the pharmaceutical company's value.The pharmaceutical company's value equal to the value of existing enterprise's profitability coupled with the firm's potential profitability.This paper selects the Shanghai and Shenzhen stock markets pharmaceutical company merger cases in 2014 to 2015 as research subjects,on which the company's investment value of 10 M & A cases were assessed and analyzed using statistical methods to verify the feasibility of the basic method.From the results of the company involved in the assessment,the assessment is generally worth the price of the transaction.It is a positive correlation.However,in assessing the results,it is also found another phenomenon that the same company's theoretical price is significantly difference from the market price,our sample show that three companies' theoretical price is substantially greater than transaction price.As for the reason of this phenomenon,the paper present the following views,first,the value of some companies is unreasonably overestimated.Second,some companies are overvalued because investors expect them better.Third,based on data from the annual reports,we calculate the company's growth rates and forecast the future cash flows of the enterprise,thus the forecasting is subjective.In the Select Option Law on volatility,we use historical volatility,without the use of implied volatility,affecting the results of the assessment.We find that combination of option pricing method and DCF method to assess the value of pharmaceutical companies is applicable,the method is more accurate than the traditional DCF method,it can be used in more pharmaceutical companies trading case.