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Intellectual Capital and Financial Performance of Biotech Companies in the Pharmaceutical Industry

Ion Anghel, Marian Siminica (), Mirela Cristea, Mirela Sichigea and Gra?iela Georgiana Noja
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Ion Anghel: The Bucharest University of Economic Studies, Bucharest, Romania
Mirela Cristea: University of Craiova, Craiova, Romania
Mirela Sichigea: University of Craiova, Craiova, Romania
Gra?iela Georgiana Noja: West University of Timisoara, Timisoara, Romania

The AMFITEATRU ECONOMIC journal, 2018, vol. 20, issue 49, 631

Abstract: The paper’s aim is to analyse the interdependency between the intellectual capital and the financial performance of biotechnological (biotech) companies in the pharmaceutical industry. The analysis was performed for 24 biotech companies in this branch considered during 2002-2014, based on several indicators available on the Thomson Reuters database. The financial performance was measured through the return on assets (ROA), return on equity (ROE) and the debt-to-equity ratio (DE). In order to capture the intellectual capital, the focus was on a designing a new indicator, proposed by the authors, respectively the efficiency of research and development expenditures (ECD), along with another proxy, previously attested by the literature and reflected through the market to-book ratio (MTB). The research methodology resides on applying the correlation method, robust regression, and structural equations modelling (SEM). The results reveal a significant negative relationship between ROA, ROE and MTB, which contradicts the literature and suggests that, for this particular type of companies, MTB isn’t relevant to express the intellectual capital. MTB was positively correlated with DE. When we used the ECD, the results attested a strongly positive and significant relation with ROA and ROE, and a negative one with DE. Therefore, the applied tests confirm ECD as the most suitable indicator to appreciate the intellectual capital for the biotech companies in the pharmaceutical industry.

Keywords: intellectual capital; bioeconomy; biotech companies; company’s value; financial performance; correlation analysis; structural equation models (SEM). (search for similar items in EconPapers)
JEL-codes: O34 Q57 G32 C58 (search for similar items in EconPapers)
Date: 2018
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