What's A Drug Worth?

Sales estimates are only a starting point, though, as a company should not be valued on sales alone. For the most part, large biotech companies such as Amgen (Nasdaq: AMGN) and Genentech (NYSE: DNA) are valued on earnings and expectations for earnings growth. Unfortunately, placing a value on small biotechs such as Abgenix (Nasdaq: ABGX) or OSI Pharmaceuticals (Nasdaq: OSIP) is not nearly as straightforward. To arrive at a value estimate for these unprofitable firms, we have to put in a bit more effort.