3 ms·

It's not so much the cost, it's also the delay. At a 5% cost of capital, and a 10 year lag between R&D and final approval, your real cash flows are 40% lower du

It's not so much the cost, it's also the delay. At a 5% cost of capital, and a 10 year lag between R&D and final approval, your real cash flows are 40% lower due to the delay. At a 10% cost of capital, they are 60% lower. Sales also take several additional years to ramp up. This doesn't apply so much to Covid vaccines, as the time frame is accelerated and demand is already high.

Scandiravian 6y ago
The 1bn is only the out-of-pocket cost for development and doesn't factor in for instance opportunity cost. If we include everything required to develop a vaccine, I'd imagine we're looking at something north of 2.5bn There's so many ways to calculate the cost, that I think it's more important to be aware of the assumptions made for the estimate, than the number itself (which I also failed to do in my original answer) I think people underestimate the cost of drug development, because the numbers are so big, that it doesn't seem realistic for companies to survive