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Patent Citations Indicating Present Value Of The Biotechnology Business

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Author Info

  • TUOMO NIKULAINEN

    (ETLA, the Research Institute of the Finnish Economy, Helsinki, Finland)

  • RAINE HERMANS

    (ETLA, the Research Institute of the Finnish Economy, Helsinki, Finland; Kellogg School of Management, Northwestern University, IL, USA)

  • MARTTI KULVIK

    (ETLA, the Research Institute of the Finnish Economy, Helsinki, Finland; Department of Neurology, HUCH Helsinki University Central Hospital, Helsinki, Finland)

Abstract

In this paper our aim is to assess the potential of using patent statistics in predicting the future sales anticipations and present value of a company active in the science-based industry. Instead of using conventional patent and patent application counts as indicators, we constructed patent citation weighted portfolios for each company. This way the heterogeneity of patents can be taken into account. Our data covers biotechnology patents held by Finnish biotechnology companies. Empirical results imply that particularly backward citations are related to present value estimations of the companies. In contrast to some previous studies, forward citations do not seem to predict the present value estimations. The findings provide some important implications on interpreting the significance of patent citations regarding valuation of science-based companies, and planning technology and innovation policies.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal International Journal of Innovation and Technology Management.

Volume (Year): 05 (2008)
Issue (Month): 03 ()
Pages: 279-301

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Handle: RePEc:wsi:ijitmx:v:05:y:2008:i:03:p:279-301

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Related research

Keywords: Biotechnology; patent citations; patents; valuation; JEL Classification: O30; JEL Classification: M21; JEL Classification: L25;

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References

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  1. Harhoff, Dietmar & Scherer, Frederic M. & Vopel, Katrin, 2003. "Citations, family size, opposition and the value of patent rights," Research Policy, Elsevier, vol. 32(8), pages 1343-1363, September.
  2. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
  3. Jean O. Lanjouw & Mark Schankerman, 1999. "The Quality of Ideas: Measuring Innovation with Multiple Indicators," NBER Working Papers 7345, National Bureau of Economic Research, Inc.
  4. Nikulainen, Tuomo & Hermans, Raine & Kulvik, Martti, 2006. "Patent citations indicating present value of the biotechnology business," Discussion Papers 1048, The Research Institute of the Finnish Economy.
  5. Maria Luisa Mancusi, 2003. "Geographical concentration and the dynamics of countries' specialization in technologies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 269-291.
  6. Dietmar Harhoff & Francis Narin & Frederic M. Scherer & Katrin Vopel, 1997. "Citation Frequency and the Value of Patented Innovation," CIG Working Papers FS IV 97-26, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  7. Albert, M. B. & Avery, D. & Narin, F. & McAllister, P., 1991. "Direct validation of citation counts as indicators of industrially important patents," Research Policy, Elsevier, vol. 20(3), pages 251-259, June.
  8. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-51, Spring.
  9. Nikulainen, Tuomo & Pajarinen, Mika & Palmberg, Christopher, 2005. "Patents and Technological Change - A Review with Focus on the FEPOCI Database," Discussion Papers 984, The Research Institute of the Finnish Economy.
  10. Narin, Francis & Noma, Elliot & Perry, Ross, 1987. "Patents as indicators of corporate technological strength," Research Policy, Elsevier, vol. 16(2-4), pages 143-155, August.
  11. Ernst, Holger, 2003. "Patent information for strategic technology management," World Patent Information, Elsevier, vol. 25(3), pages 233-242, September.
  12. Reitzig, Markus, 2004. "Improving patent valuations for management purposes--validating new indicators by analyzing application rationales," Research Policy, Elsevier, vol. 33(6-7), pages 939-957, September.
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Citations

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Cited by:
  1. Nikulainen, Tuomo & Hermans, Raine & Kulvik, Martti, 2006. "Patent citations indicating present value of the biotechnology business," Discussion Papers 1048, The Research Institute of the Finnish Economy.
  2. Nikulainen, Tuomo & Tahvanainen, Antti-Jussi & Kulvik, Martti, 2012. "Expectations, Reality and Performance in the Finnish Biotechnology Business," Discussion Papers 1286, The Research Institute of the Finnish Economy.

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