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3. Why do companies operating within the pharmaceutical and biotechnology industries typically sustain higher ROICs than...

3. Why do companies operating within the pharmaceutical and biotechnology industries typically sustain higher ROICs than firms in the technology, hardware, and equipment industries?

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Expert Solution

* Generally Pharmaceutical and biotechnology industries does lots of research and invent or discover a drug. These companies takes patent for the drugs for a period say 20 years, during this period any other company is not supposed to release any generic version of the drug.

* In this way the companies gain a competitive edge for few years and the company becomes popular. once the patent period is completed they loose the advantage of the patent protecting the discovery or invention.

* Where as the firms in the technology, hardware and equipment industries they dont have the concept of patents to protect over the products they discovered or invented. example we can see in apple phones which technology is copied and phones with similar technology is manufactured and sold by local companies.

* Thus the Pharmaceutical and biotechnology industries sustain higher ROICs than firms in the technology , hardware and equipment industries.

jeff jeffy answered 2 years ago
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