Pharma Finance Flashcards
What was AstraZeneca’s response to the patent cliff between 2012-2017?
Invested in Oncology, CVMD, and Respiratory to offset $10bn revenue loss from generics.
What happened in the 2014 Pfizer takeover attempt of AstraZeneca?
Pfizer offered £55/share (£80bn); AstraZeneca rejected and pursued internal R&D.
List components of pharma cash flow forecasts.
Revenue, variable/fixed costs, depreciation, taxes, working capital.
What does eNPV @ WACC% mean?
Risk-adjusted NPV calculated using the Weighted Average Cost of Capital.
Define Peak Year Sales (PYS) and Break-even Year.
PYS: max annual revenue;
Break-even: year NPV becomes positive.
What is Max Exposure in pharma finance?
The maximum investment before generating positive cash flow.
What does a Tornado Plot show in sensitivity analysis?
Impact of variable changes (e.g., sales, cost) on IRR/NPV.
What are typical costs for each drug development phase?
Discovery: $3–40m;
Preclinical: $20–100m;
Phase 1: $60–300m;
Phase 2/3: $500m–2.5bn.
How does AstraZeneca’s R&D success rate compare to the industry?
Higher success rates in all phases using 5R Framework (e.g., Phase 1: >50% vs 22.5%).
List the 5Rs in AstraZeneca’s R&D framework.
Right Target, Safety, Patients, Commercial Value, Digital Solutions.
What are the 3 key questions in pharma deal evaluation?
- What is it worth?
- How to share value?
- How to structure terms?
Which tools are used to assess investment value in pharma?
DCF, NPV, IRR, sensitivity and scenario analysis.
Why are licensing deals important in pharma?
They help share financial risk while accessing new opportunities.
What is the essence of pharma finance?
Balancing risk, innovation, and returns through informed investment decisions.
