Researh On Value Evaluation Of Biomedical Enterprises Based On Real Option Method

The biopharmaceutical industry is growing rapidly and is mainly involved in complex basic research,new drug discovery,clinical trials,marketing and regulation.As China’s population ages,the trend of biopharmaceutical industry will continue to grow.According to the "14th Five-Year Plan" and "2035 Vision",China will focus on strengthening strategic scientific and technological forces,focusing on major innovation areas such as biomedicine,reorganizing state key laboratories,and forming a structured and efficient laboratory system.From this perspective,the biopharmaceutical industry is one of the most promising fields in China’s science and technology sector.The value assessment of biopharmaceutical companies is an important part of the decision making process and a basic indicator for external investors to assess the valuation of a biopharmaceutical company.Although the development trend of biopharmaceutical industry is gradually strengthening,there is a lack of effective value assessment system.As one of the leading vaccine companies in biopharmaceuticals,Watson Biologicals is representative,so this paper selects Watson Biologicals as the research object and uses the real options method to supplement the traditional valuation model to evaluate whether the model is reasonable and scientific.This paper examines the valuation of biopharmaceutical industry from theoretical studies and case studies.First,this paper compares domestic and international literature,related concepts and theoretical foundations,analyzes the biopharmaceutical industry,and constructs a valuation model based on value components.Secondly,using the case study method,we evaluate the enterprise value of Watson Bio,assess the current value of the enterprise using the FCFF model,evaluate the potential value of the projects under development using the B-S model,and finally compare and analyze the market value of Watson Bio on the valuation base date with the valuation results.Through the valuation of Watson Bio,it was found that the FCFF model alone would underestimate the value of the enterprise,while the valuation results were found to be closer to the market value after supplementing the calculation with the real option model for the inprocess research and development projects with significant R&D investment.Therefore,it is concluded that the model has certain applicability to biopharmaceutical companies,and that a comprehensive and targeted valuation approach should be adopted when valuing biopharmaceutical companies with a focus on potential value.The purpose of this paper is to make suggestions for the valuation of biopharmaceutical companies by assessing the enterprise value of Watson Biosciences,expecting to provide a reference for the valuation of the biopharmaceutical industry.