Intellectual capital and the profitability of pharmaceutical and biotechnological companies listed on the Warsaw Stock Exchange

The goal of this article is to determine the influence of intellectual capital (IC) with its components on the profitability of pharmaceutical and biotechnological companies listed on the Warsaw Stock Exchange. The time range of the study covers the years 2015–2021. Various research methods were used: descriptive analysis, desk research analysis, the A-VAIC method, descriptive statistics and panel model estimation. Time lag was applied to variables in panel models in order to verify whether IC affects the future profitability of enterprises. The findings confirmed the influence of IC on the profitability of assets and profitability of equity. Moreover, they revealed a varied influence of individual components of IC on the indicated measures describing the profitability. The study confirms that IC plays an important role in strengthening the profitability of pharmaceutical and biotechnological companies. As a result, it enables companies to achieve and maintain a sustainable competitive advantage, and thus shapes their market share. The results of this study should provide additional knowledge concerning the significance of IC in the context of its influence on the profitability of enterprises and interest a wide spectrum of people: scientists, management staff, representatives of supervisory institutions and market practitioners – investors and analysts.

Amin, S., & Aslam, S. (2017). Intellectual capital, innovation and firm performance of pharmaceuticals: A study of the London Stock Exchange. Journal of Information & Knowledge Management, 16(2), 1750017. https://doi.org/10.1142/s0219649217500174

Anghel, I., Siminicã, M., Cristea, M., Sichigea, M., & Noja, G. G. (2018). Intellectual capital and financial performance of biotech companies in the pharmaceutical industry. Amfiteatru Economic Journal, 20(49), 631–646. https://doi.org/10.24818/EA/2018/49/631

Arellano, M. (1987). Computing robust standard errors for within-groups estimators. Oxford Bulletin of Economics and Statistics, 49(4), 431–434. https://doi.org/10.1111/j.1468-0084.1987.mp49004006.x

Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58(2), 277–297. https://doi.org/10.2307/2297968

Bhattu-Babajee, R., & Seetanah, B. (2022). Value-added intellectual capital and financial performance: Evidence from Mauritian companies. Journal of Accounting in Emerging Economies, 12(3), 486–506. https://doi.org/10.1108/JAEE-11-2020-0300

Bombiak, E. (2021). Zielony kapitał relacyjny jako instrument budowania konkurencyjności przedsiębiorstw. Marketing i Rynek, (1), 22–29. https://doi.org/10.33226/1231-7853.2021.1.3

Chen, M., Cheng, S., & Hwang, Y. (2005). An empirical investigation of the relationship between intellectual capital and firms' market value and financial performance. Journal of Intellectual Capital, 6(2), 159–176. https://doi.org/10.1108/14691930510592771

Chizari M., Mehrjardi R. Z., Sadrabadi M. M., & Mehrjardi F. K. (2016). The impact of intellectual capitals of pharmaceutical companies listed in Tehran stock exchange on their market performance. Procedia Economics and Finance, 36, 291–300. https://doi.org/10.1016/S2212-5671(16)30040-5

Dańska-Borsiak, B. (2011). Dynamiczne modele panelowe w badaniach ekonomicznych. Wydawnictwo Uniwersytetu Łódzkiego.

Dženopoljac, V., Kwiatek, P., Dženopoljac, A., & Bontis, N. (2022). Intellectual capital as a longitudinal predictor of company performance in a developing economy. Knowledge and Process Management, 29, 53–69. https://doi.org/10.1002/kpm.1696

Dženopoljac, V., Muhammed, S., & Janošević, S. (2019). Intangibles and performance in oil and gas industry. Management Decision, 57(5), 1267–1285. https://doi.org/10.1108/MD-11-2017-1139

Edvinsson, L., & Malone, M. S. (2001). Kapitał intelektualny. Wydawnictwo Naukowe PWN.

Fijałkowska, J. (2013). VAIC™ jako metoda pomiaru dokonań przedsiębiorstw. Zarządzanie i Finanse, 1(2), 63–77.

Gupta, J., Rathore, P., & Kashiramka, S. (2022). Impact of intellectual capital on the financial performance of innovation-driven pharmaceutical firms: Empirical evidence from India. Journal of the Knowledge Economy, 14, 1052–1076. https://doi.org/10.1007/s13132-022-00927-w

Gupta, K., Goel, S., & Bhatia, P. (2020). Intellectual capital and profitability: Evidence from Indian pharmaceutical sector. Vision, 24(2), 204–216. https://doi.org/10.1177/0972262920914108

INFARMA, & Deloitte. (2022). Innowacyjne firmy farmaceutyczne jako wiodący partnerzy przedsięwzięć służących rozwojowi Polski. Raport. https://www.infarma.pl/assets/files/2022/Innowacyjne_firmy_farmaceutyczne_jako_wiodacy_partner_przedsiewziec_sluzacych_rozwojowi_Polski_%20RAPORT.pdf

Itami, H., & Roehl, T. W. (1987). Mobilizing Invisible Assets. Harvard University Press.

Kafili, V., Mirzaei Nezamabad, M., & Hosseinloo, H. (2022). Intellectual capital and its effect on the financial performance of pharmaceutical companies. Journal of Development and Capital, 7(2), 157–172. https://doi.org/10.22103/jdc.2022.19019.1207

Komnenic, B., Tomic, D., & Tomic, G. (2010). Measuring efficiency of intellectual capital in agriculture sector of Vojvodina. Applied Studies in Agribusiness and Commerce, 4(1–2), 25–31. https://doi.org/10.19041/APSTRACT/2010/1-2/3

Kufel, T. (2007). Ekonometria. Rozwiązywanie problemów z wykorzystaniem programu GRETL. Wydawnictwo Naukowe PWN.

Michalczuk, G., Konarzewska, U., & Rutkowska, I. (2021). Efektywność kapitału intelektualnego a wyniki spółek społecznie odpowiedzialnych indeksu WIG-Energia. Optimum. Economic Studies, 3(105), 15–32. https://doi.org/10.15290/OES.2021.03.105.02

Nadeem, M., Dumay, J., & Massaro, M. (2019). If you can measure it, you can manage it: A case of intellectual capital. Australian Accounting Review, 29(2), 395–407. https://doi.org/10.1111/auar.12227

Naidenova, I., & Parshakov, P. (2013). Intellectual capital investments: Evidence from panel VAR analysis. Journal of Intellectual Capital, 14(4), 634–660. https://doi.org/10.1108/JIC-01-2013-0011

Nguyen, N. T. (2023). The impact of intellectual capital on service firm financial performance in emerging countries: The case of Vietnam. Sustainability, 15(9), 7332. https://doi.org/10.3390/su15097332

Ovechkin, D. V., Romashkina, G. F., & Davydenko, V. A. (2021). The impact of intellectual capital on the profitability of Russian agricultural firms. Agronomy, 11(2), 286. https://doi.org/10.3390/agronomy11020286

Pulic, A. (2004). Intellectual capital – does it create or destroy value? Measuring Business Excellence, 8(1), 62–68. https://doi.org/10.1108/13683040410524757

Razafindrambinina, D., & Anggreni, T. (2011). Intellectual capital and corporate financial performance of selected listed companies in Indonesia. Malaysian Journal of Economic Studies, 48(1), 61–77.

Sardo, F., & Serrasqueiro, Z. (2017). Intellectual capital and firms' financial performance: A European empirical study. Business and Economic Research, 7(2), 1–18. https://doi.org/10.5296/ber.v7i2.11377

Smriti, N., & Das, N. (2017). Impact of intellectual capital on business performance: Evidence from Indian pharmaceutical sector. Polish Journal of Management Studies, 15(1), 232–243. https://doi.org/10.17512/pjms.2017.15.1.22

Smuda-Kocoń, M. (2019). Model VAIC – krytyczna analiza koncepcji. Studia Ekonomiczne, (380), 104–113.

Soewarno, N., & Tjahjadi, B. (2020). Measures that matter: An empirical investigation of intellectual capital and financial performance of banking firms in Indonesia. Journal of Intellectual Capital, 21(6), 1085–1106. https://doi.org/10.1108/JIC-09-2019-0225

Sopińska, A. (2008). Wiedza jako strategiczny zasób przedsiębiorstwa. Analiza i pomiar kapitału intelektualnego przedsiębiorstwa. Oficyna Wydawnicza Szkoły Głównej Handlowej w Warszawie.

Sveiby, K. E. (2010, April 27). Methods of measuring intangible assets. http://www.sveiby.com/files/pdf/intangiblemethods.pdf (access 25.02.2023).

The Polish Investment and Trade Agency. (2021). Succeed with Poland. The pharmaceutical sector. https://www.paih.gov.pl/files/?id_plik=42930

The Polish Investment and Trade Agency. (2022). The Biotechnology sector in Poland: overview for investors and industries. https://www.bioforum.pl/files/The_biotechnology_sector_in_Poland.pdf

Weqar, F., Sofi, Z. A., & Haque, S. M. I. (2021). Nexus between intellectual capital and business performance: Evidence from India. Asian Journal of Accounting Research, 6(2), 180–195. https://doi.org/10.1108/AJAR-07-2020-0064

Xu, J., & Li, J. (2022). The interrelationship between intellectual capital and firm performance: Evidence from China's manufacturing sector. Journal of Intellectual Capital, 23(2), 313–341. https://doi.org/10.1108/JIC-08-2019-0189

Xu, J., Haris, M., & Liu, F. (2023). Intellectual capital efficiency and firms' financial performance based on business life cycle. Journal of Intellectual Capital, 24(3), 653–682. https://doi.org/10.1108/JIC-12-2020-0383

Xu, J., Haris, M., Yao, H. (2019). Should listed banks be concerned with intellectual capital in emerging Asian markets? A Comparison between China and Pakistan, Sustainability, 11(23), 6582. https://doi.org/10.3390/su11236582

Zhang, X. B., Duc, T. P., Burgos Mutuc, E., & Tsai, F. S. (2021). Intellectual capital and financial performance: Comparison with financial and pharmaceutical industries in Vietnam. Frontiers in Psychology, 12, 595615. https://doi.org/10.3389/fpsyg.2021.595615