December 17, 2021
Summary
The YDC Data Monetization Index (DMI) for Life Sciences varies by industry and company:
- Pharmaceutical companies like Merck and Johnson & Johnson have YDC DMIs in the 6%-7% range
- Smith & Nephew has a DMI of 30.1%, the only pure-play medical device company in our analysis although we did also factor in Johnson & Johnson’s Medical Devices division
- DNA testing companies firms 23AndMe and Ancestry.com had DMIs in the range of 15%-23%
A higher YDC DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher YDC DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a separate blog.
Definitions
- YDC Data Monetization Index (DMI) = Data Valuation / Enterprise Value
- The Data Valuation for Pharmaceuticals and Medical Devices only included Clinical Trials
- The Data Valuation for DNA testing companies only covered genomic data
- Enterprise Value = Equity Value + Long Term Debt – Cash, a key metric used in the investment community
Methodology
Clinical trial data is based on publicly-available datasets from the National Institutes of Health (NIH), SEC filings on product revenues and gross margins, as well as industry estimates of success rates by clinical trial stage. Genomic data valuation is based on comparable transactions in the industry.
Our analysis was conducted in October 2021.
