Research On The Relationship Between Intangible Asset Investment And Performance In Pharmaceutical Industry

In the background of the technology development and fierce competition,enterprises have to put more efforts on the inputs of the intangible assets for their sustainability and strength,especially in the pharmaceutical industry.Statistics showed the cost of research and development and the investment of new products kept steady and gradually increasing trend in the last decade in China.And in 2013 health industry was lifted up to the state strategic level due to the State Council's initiative of the health service development.Many investors flocked to the pharmaceutical industry in the last three years according to the report from Zero2 IPO Research Center.The large inputs in the intangible domain produce common topics among scholars and entrepreneurs about the company behavior such as technology innovation and new product development.They want to know more about how the intangible assets influence the performance and the company's future growth,how they should distribute the resources between the early phase and latter one,how to balance between the self-created intangible assets and the acquisition,whether they can estimate the value of the company according to the input structure of the intangible assets.The purpose of the thesis is trying to partly answer these questions after figuring out the relationships between the input of various intangible assets and the operation performance in this industry and tell the differences for them.The definition of intangible assets here comprises research expenditures,which are deducted from revenues,and good will,cost of development and technology intangible assets which are all listed in the balance sheet.According to three models and the regression analyses applied in this dissertation,research expenditures have the strongest correlation to the EBITDA and the ratio of research expenditures to revenues still has the strongest correlation to the Tobin's Q.However the costs of development have negative impact to the performance and there is no significant correlation between good will and Tobin's Q.The results of empirical analyses from this thesis can apply to practice.Investors can refer to these results to calculate or judge the future for the target companies or projects in pharmaceutical industry before they make decisions.The senior executives and the board of directors will put more budgets on the investment of research and development to get better return from the stock market.At the same time M&A should be an alternative choice due to the positive impact from technology intangible assets and avoidance of negative influence from cost of development.And from the government's point view they will have more confidence to create better environment for the pharmaceutical industry.