pharmaceutical_net_present_value_model_example
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For more context on what this model does and why I created it, read this blog post:
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http://www.cureffi.org/2019/04/29/financial-modeling-in-rare-disease/
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Cost & success rate assumptions
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PHASESdurationstart yearP(success in this phase)P(reaching this phase)patients
per-patient annual cost
annual patient costs
annual other costs
total annual costPhases again for VLOOKUPrevenue multiplierFTE cost250000
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Preclinical5150%100%15000001500000Preclinical0
FTEs per year preclinical
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Phase I2665%50%204100082000012300002050000Phase I0NDA fee2000000
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Phase II3832%32%3041000123000018450003075000Phase II0
Staff costs during registration
1000000
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Phase III51160%10%5041000205000030750005125000Phase III0
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Registration11683%6%30000003000000Registration0
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Approved017100%5%15000001500000Approved1
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Revenue assumptions
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Prevalence (U.S. patients alive at any given time)
200
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Proportion reachable30%
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Compliance rate75%
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Annual drug price at approval700000
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Baseline annual revenue31500000
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Annual drug price increase5%
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Discounting assumptions
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Discount rate8%
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Model
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YEARPHASE
discount factor
probability of reaching
risk- and discount-adjusted value of one dollar
revenue yes/no
costrevenue
nominal profit/loss
discounted profit/loss
probability-adjusted discounted profit/loss
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1Preclinical1.001.001.000$1,500,000$0-$1,500,000-$1,500,000-$1,500,000
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2Preclinical0.921.000.920$1,500,000$0-$1,500,000-$1,380,000-$1,380,000
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3Preclinical0.851.000.850$1,500,000$0-$1,500,000-$1,269,600-$1,269,600
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4Preclinical0.781.000.780$1,500,000$0-$1,500,000-$1,168,032-$1,168,032
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5Preclinical0.721.000.720$1,500,000$0-$1,500,000-$1,074,589-$1,074,589
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6Phase I0.660.500.330$2,050,000$0-$2,050,000-$1,351,117-$675,559
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7Phase I0.610.500.300$2,050,000$0-$2,050,000-$1,243,028-$621,514
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8Phase II0.560.320.180$3,075,000$0-$3,075,000-$1,715,378-$553,210
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9Phase II0.510.320.170$3,075,000$0-$3,075,000-$1,578,148-$508,953
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10Phase II0.470.320.150$3,075,000$0-$3,075,000-$1,451,896-$468,237
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11Phase III0.430.100.050$5,125,000$0-$5,125,000-$2,226,241-$232,620
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12Phase III0.400.100.040$5,125,000$0-$5,125,000-$2,048,142-$214,010
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13Phase III0.370.100.040$5,125,000$0-$5,125,000-$1,884,290-$196,889
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14Phase III0.340.100.040$5,125,000$0-$5,125,000-$1,733,547-$181,138
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15Phase III0.310.100.030$5,125,000$0-$5,125,000-$1,594,863-$166,647
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16Registration0.290.060.020$3,000,000$0-$3,000,000-$858,892-$53,937
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17Approved0.260.050.011$1,500,000$31,500,000$30,000,000$7,901,808$412,856
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18Approved0.240.050.011$1,500,000$33,075,000$31,575,000$7,651,321$399,769
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19Approved0.220.050.011$1,500,000$34,728,750$33,228,750$7,407,896$387,050
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20Approved0.210.050.011$1,500,000$36,465,188$34,965,188$7,171,410$374,694
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21Approved0.190.050.011$1,500,000$38,288,447$36,788,447$6,941,735$362,694
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22Approved0.170.050.011$1,500,000$40,202,869$38,702,869$6,718,735$351,043
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23Approved0.160.050.011$1,500,000$42,213,013$40,713,013$6,502,277$339,733
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24Approved0.150.050.011$1,500,000$44,323,663$42,823,663$6,292,219$328,758
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25Approved0.140.050.011$1,500,000$46,539,846$45,039,846$6,088,422$318,110
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26Approved0.120.050.011$1,500,000$48,866,839$47,366,839$5,890,743$307,782
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27Approved0.110.050.011$1,500,000$51,310,181$49,810,181$5,699,039$297,765
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28Approved0.110.050.011$1,500,000$53,875,690$52,375,690$5,513,166$288,054
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29Approved0.100.050.011$1,500,000$56,569,474$55,069,474$5,332,982$278,639
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30Approved0.090.050.001$1,500,000$59,397,948$57,897,948$5,158,342$269,515
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Model results
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nominal profit$546,906,908
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NPV profit-$5,548,472
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