Presentation (CTI)

OBJECTIVES: Risk-adjusted net present value (rNPV) models are the standard for evaluating pharmaceutical R&D investments but are increasingly applied to medical devices despite differences in development pathways. This study compared pharmaceutical and medical device valuation frameworks to identify transferable components, technology-specific adaptations, and develop a standardized framework for cross-technology investment evaluation.
METHODS: A conventional pharmaceutical rNPV model was used as the reference architecture. Model components were evaluated for applicability to medical devices and classified according to their role within the valuation process. Commercial assumptions were standardized, while technology-specific development characteristics were modified to reflect differences in timelines, development risk, R&D investment, manufacturing costs, and operating expenditure.
RESULTS: Comparative analysis identified a three-domain valuation taxonomy governing healthcare investment models. First, Financial Parameters, comprised discounted cash flow methodology, taxation, working capital, capital expenditure, forecast horizon, and valuation outputs including rNPV, IRR, and payback. These remained invariant across pharmaceutical and medical device development, establishing a universal financial architecture. Second, Commercial Parameters, included addressable population, market growth, pricing, revenue ramp, market penetration, and commercial exclusivity. These define market opportunity rather than technology and should be standardized when comparing investments. Third, Technology Parameters, comprised development timeline, probability of commercial success, remaining R&D investment, manufacturing economics, and fixed operating costs. These represent the intrinsic economics of innovation and were identified as the only parameters requiring technology-specific adaptation. The analysis demonstrates that robust cross-technology investment evaluation can be achieved.
CONCLUSIONS: Rather than requiring independent valuation models, healthcare technologies can be evaluated using a common rNPV architecture built on three parameter domains: invariant financial parameters, standardized commercial parameters, and technology-specific development parameters. This taxonomy provides a transparent, reproducible methodology for portfolio prioritization and strategic investment decisions across pharmaceuticals, medical devices, diagnostics, and digital health technologies.