Case Study Pharma

Case Study: Pharmaceutical Patent Valuation

Valuing a pharmaceutical patent portfolio using Relief from Royalty.

Scenario

BiopharmaCorp holds a patent portfolio for a cancer therapeutic with 12 years remaining patent life. Annual revenue projections range from $50M to $300M at peak. Comparable license rates for oncology patents range from 8-12%.

Valuation Steps

1. Determine Useful Life

from intangible_valuation.utils.formulas import estimate_useful_life
life = estimate_useful_life(asset_type="patent", legal_life=12, obsolescence_rate=0.06)
# Economic life: ~15 years, limited by legal life → 12 years

2. Benchmark Royalty Rate

from intangible_valuation.advanced.royalty_benchmark import royalty_rate_benchmark
benchmark = royalty_rate_benchmark(ip_type="patent", industry="pharmaceutical")
# Benchmark range: 3-15% (median ~8%)

3. Relief from Royalty Valuation

from intangible_valuation.income_methods.relief_from_royalty import relief_from_royalty
revenues = [50, 80, 120, 180, 250, 300, 280, 240, 200, 160, 120, 80]  # in $M
value = relief_from_royalty(
    revenue_projections=[r * 1_000_000 for r in revenues],
    royalty_rate=0.08, discount_rate=0.18, tax_rate=0.21, useful_life=12, tab_enabled=True,
)
# Patent Value: ~$XX M

4. Sensitivity Analysis

Key drivers: royalty rate (±2%), discount rate (±3%), peak revenue (±20%)

Key Takeaways

• Pharmaceutical patents are high-value, high-risk assets
• Royalty rates benchmark critical for credible valuation
• TAB significantly impacts value (~22% uplift at 21% tax rate)
• Probability of FDA approval should be factored separately