| For the evaluation of biotechnology and pharmaceutical companies the life span of patents covering the products are considered in terms of established valuation models, like the discounted cash flow model or the real option theory. For the period of market exclusivity there is a high probability that the models will take a stable cash inflow through future revenues into account. A heavy discount is applied when the patent is scheduled to expire and it is expected that generic products will conquer the market at severely reduced prices. This has a direct consequence for the calculated value of an already listed company or an IPO candidate ready to go public. However, with the expiry of the patent's validity after a maximum of 20 years, there are still some legal instruments which can allow for the extension of the market exclusivity of a product. |
