Table 2: The input parameters for the discounted cash flow model.
Model parameter | Value |
Cost of development (US$ million) | US$701 million |
Cost pre-clinical | US$217 million |
Phase I | US$84 million |
Phase II | US$142 million |
Phase III | US$190 million |
Phase IV | US$68 million |
Years of development & approval | 8 years |
Population | Western markets: 872.5 million |
Global markets: 1,670 million | |
Period of reimbursement | 1 year |
Net patent period after registration | 12 years |
Uptake | 80% from year 1 |
Cost of revenue | 40% |
Hurdle rate | 12% |
Probability | |
Phase I to II | 70% (failure - 30%) |
Phase II to III | 39% (failure - 61%) |
Phase III to FDA approval* | 69% (failure - 31%) |
*Assumption: Same probability for EMA.