Gene Patents: Incentive or Impediment for Pharmaceutical Innovation?

Abstract

This research explores biopharmaceutical companies’ behavior of obtaining patent
protection under the tightened patentability standard for biotechnology innovation. To explore the
importance of innovations, we collected time-series data from twenty firms over two decades and
examined the role of biotechnology on a firm’s operating performance and profit via an empirical
regression model. The results suggest that greater R&D investment brings firms higher revenue and
profit, but a more influential patent does not seem to reward all companies. The possession of
biotechnology can help companies increase revenue. For large-scale R&D firms, marketing
involvement is particularly important to boost revenue, but low-scale R&D firms should avoid
having a high ratio of biotechnology in their patent portfolio strategy.