Valuing biotechnology companies: Does classification by technology type help?

摘要

This paper explores whether conventional financial ratios can be used for portfolio construction in thebiotechnology sector after the companies are classified into groups based on technology platforms suchas DNA, biochemistry and bioprocessing technologies. We find some success in the use of financialmeasures after the classification is made indicating that they do a better job when comparing like firms.Appropriate risk adjustment is, however, critical to determining if superior performance is attained.This remains a challenge due to the difficulties in finding appropriate risk measures for the sector.