REAL OPTIONS AND THE EVALUATION OF RESEARCH AND DEVELOPEMENT PROJECTS IN THE PHARMACEUTICAL INDUSTRY : A CASE STUDY(Special Issue on Theory, Methodology and Applications in Financial Engneering)
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概要
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Research and development projects in the pharmaceutical industry normally last for a decade, require a large amount of investment and are highly risky. During the early stages of development, a company can seldom tell which chemical compound will successfully pass all subsequent stages and eventually become a marketable drug. Moreover, the long development process makes it difficult to predict the value of the marketable drug. The Net Present Value (NPV) method, used in most pharmaceutical companies to value their research and development projects, does not take into account the value of managerial flexibility. Examples of managerial flexibility include the right to stop or to make changes during the life of a project. Real-option evaluation expands the NPV method to embody the notion of managerial flexibility. For long-term projects, managers act upon new information revealed in the future and thus the real options approach better suits the decision making process in R &D management. In this article, we compute the value of an ongoing R&D project at Nihon Schering Kabushiki Kaisha (Nihon Schering). We show that, at the pre-clinical stage, the project had a negative value when evaluated under the traditional NPV method but a slightly positive value under the real-option approach. The difference comes from the recognition of "real options" embedded in the project. We conclude that real-option evaluation provides for a relevant and reliable method for reviewing a company's internal projects.
- 社団法人日本オペレーションズ・リサーチ学会の論文
著者
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Takezawa Naoya
International University Of Japan
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Trang Nguyen
International University Of Japan
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Takezawa Nobuya
International Christian University