The Life Sciences industry is one defined by constant innovation and complexity. Drug development is essential to a company’s survival. Despite record levels of large pharma research and development (R&D) spend,[1] other avenues are critical in strengthening pipelines and expanding portfolios. Targeted mergers and acquisitions (M&A) is a common path, but licensing and collaboration increasingly compliment development and commercialization efforts. These deals are often structurally complex, resulting in economic friction. While announced licensing deals for biopharma increased in 2025, following years of relative stability, the upfront payment — as a share of deal value — has declined to 7% in 2025, from a high of 13% in 2019.[2] This deal structure reduces initial capital outlay and acts to de-risk the initial investment, but can also result in disproportionate risk sharing.
As enterprise value has migrated from vertically integrated assets to contractually defined pipelines, life sciences disputes have evolved accordingly. When programs underperform or strategic priorities diverge, litigation focuses less on the ownership of the physical asset and more on how value was projected, risk was allocated, and “commercially reasonable efforts” were applied. This creates sophisticated challenges in Internet Protocol (IP) and breach of contract cases, placing net present value (NPV) modeling, market forecasting, and probabilistic damages analysis at the center of the dispute.
In litigation, and after liability is resolved — or assumed for the sake of damages analysis — the key remaining question is counterfactual: What would the commercial outcome have been if things had gone differently? This question underpins most damages claims. Despite its critical importance, the revenue models used to answer it are often vulnerable to critique, introducing risk that may weaken a claim.
A forecast that seems reasonable inside a company can fall apart when tested, as will be the case during cross-examination or rebuttal. Life sciences forecasting differs from other sectors in both complexity and risk exposure. Regulatory approval in one country does not guarantee approval in another; and even when approval is secured, sales may fall short of expectations. Adoption can lag due to a variety of reasons, including clinical conservatism, payor response, or entry of a competing drug.
Internal models prepared for planning or valuation purposes may not reflect commercial realities. When fallible assumptions carry over into a damages model without adjustment, they undermine the credibility of the claim. Reliance alone on internal models introduces risks; and courts recognize this. InZenith Elecs. Corp v. WH-TV Broadcasting Corp., 395 F3d 416, the Seventh Circuit Court affirmed the broadcaster’s estimates of lost profits based on internal projections of sales were not admissible, a key input in their expert’s lost profits analysis, because they “represent[ed] hopes rather than the result of scientific analysis.”[3] At a minimum, any internal projections relied upon in a lost profit analysis require scrutiny. In SANDOZ Inc. v. United Therapeutics Corporation,[4] each party retained an economist as an expert witness opining on damages. The court stated that it found the defendant’s expert to be “less reliable and credible” and noted that he “did not develop his own damages model or challenge most of the variables used in [the opposing expert’s] damages model.”[5]
At a high level, there are several factors that separate a defensible model from one that is more easily challenged. In life science disputes, it is critical that any revenue model relied upon:
- States assumptions and data sources clearly
- Uses appropriate market analogs to validate uptake and pricing
- Accounts for payer behavior, competitive pressure, and other external risks
- Demonstrates where uncertainty exists and how it affects the range of possible outcomes
By the time a dispute reaches the damages stage, all or most of the facts are established. What remains is the task of constructing a reasonable view of the commercial future that did not occur. The damages model becomes the framework for presenting what each side believes would have happened. This is where the forecast becomes so much more than a financial tool. In litigation, it is the arena for arguments about how markets behave, how physicians make prescribing decisions, and what outcomes were reasonably foreseeable — it is the structural foundation for the damages discussion. Like the best foundations of any structure, the best models are the ones built with discipline, grounded in data, and able to withstand challenge.
References
[1] Aitken, Murray, Alex Roland, PhD, and Michael Kleinrock, “Global Trends in R&D 2025”, IQVIA. https://www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/global-trends-in-r-and-d-2025 (accessed February 19, 2026).
[2] J.P. Morgan, “2024 Biopharma Industry Insights: Investment trends, M&A Activity, and Market Dynamics”, January 7, 2026. https://www.jpmorgan.com/insights/markets-and-economy/outlook/biopharma-medtech-deal-reports (accessed February 19, 2026)
[3] 395 F3d at 420
[4] Trade Reg. Rep. P 83055 (C.C.H.), 2024 WL 4381089
[5] Pages 23 and 24
© Copyright 2026. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
