Assignment 13- Part 3

This post will discuss what I learned from this class.

One of the biggest things this class taught me was how to correctly value patents and how that can be used to then value a company. I am going to be starting an internship in investment banking this summer where a large part of what I will be doing is valuing companies.

Historically companies have been valued on their physical assets, but more and more recently companies are being valued based on less tangible things. This include their brand name, reputation, following, human capital, and of course patents. I never really considered patents to be all that important, because I thought they expired so they didn't even last that long, and there were always ways around them. Now when I look at a company I think much more not only about patents, but about their non physical assets as a whole.

For example, Some these big pharmaceutical companies have very imporatant patents on blockbuster drugs. While the patents last, these drugs can individually bring in billions and billions of dollars for the company. After the patent has expired, other companies are free to produce other generics and thus decrease the profits from the name brand drug, but during the life of the patent it can be worth billions of dollars in yearly revenue. This idea explains why a certain pharmaceutical company buys another, as well as why it is paying so much for another drug company.