Returns to R&D Investment
Multiple Scenario Simulation
- Merck, Immunex, Boeing
- Build Plausible Business Model
- Performance = f(R&D, Probability of Technical Success, Manufacturing, Marketing, Market Size, Penetration Rate).
- Give each Input a Range of Values….
- Bounded Probability Distribution
- Or Set of Discrete Value (high-medium-low)
- Randomly Draw from Range
- Calculate Output: ROI, Sales, cash flow, NPV, etc….
- Repeat to build up Probability Distribution of Outputs.
- Use to Guide Investment Decisions