Pharma firms cash in on IP
Company directors in the pharmaceutical sector are attaching growing importance to the value of intellectual property (IP), even though current accounting standards do not normally allow them to account for the value of IP and other intangible assets, according to research by UK patent and trade mark attorneys Marks & Clerk.
The survey, which was carried out anonymously among UK pharmaceutical companies with an annual turnover in excess of £5m (€7.5m), reveals that directors in the sector have a high regard for their intangible assets: 79% of those surveyed believe that it is important to value their intangible assets, and the same number think their IP rights are key business assets.
Although under current accounting standards there is normally no value shown for intellectual property in a company's accounts, when acquiring another company 93% of directors in pharmaceutical companies believe that a company's IP portfolio is an important determinant in assessing its worth. Furthermore, 61% believe that there should be a method for showing the value of their intellectual property on the balance sheet.
The research also found that some companies are extracting value from their IP in other ways: 20% of pharmaceutical companies have used their intellectual property assets to raise finance ; for example as security for a loan or to attract venture capital.
'Pharmaceutical businesses value their intellectual property portfolios highly and, as our research shows, they believe this investment should be recognised on the balance sheet in the same way as tangible assets such as real estate or IT systems,' said Tim Andrews, Partner at Marks & Clerk. 'Fortunately, capitalising assets in this way is not the only way to realise their value. A company which has protected its intellectual property by using patents, trade marks and copyright, can use it as collateral to secure loans, or attract venture capital funding. For many small companies and start-ups, this can prove a more attractive option than other forms of raising capital ; such as remortgaging the family home.'