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PATENT CITATIONS INDICATING PRESENT VALUE OF THE BIOTECHNOLOGY BUSINESS

TUOMO NIKULAINEN

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

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RAINE HERMANS

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

Kellogg School of Management, Northwestern University, IL, USA

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, and

MARTTI KULVIK

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

Department of Neurology, HUCH Helsinki University Central Hospital, Helsinki, Finland

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https://doi.org/10.1142/S0219877008001436Cited by:7 (Source: Crossref)

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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