HUMAN CAPITAL IN LIFE SCIENCE FIRM VALUATION: A THEORETICAL MODEL

Mastergradsoppgave i næringsrettet bioteknologi, Avdeling for lærerutdanning og naturvitenskap, Høgskolen i Hedmark, 2014. Master of applied and commercial biotechnology.Value of biotechnology firms relies upon the complex interplay between human capital and IP assets, where, human capital translates the market potential of IP asset to the true market value. This study aims to introduce the human capital of biotech firms into already existing valuation models in form of human resource factor (hrf). Built as an extension on available literature, a theoretical linear model consisting six parameters, viz.; breed of managers, star scientists, knowledge continuity, human resource interaction and CEO effect, was developed to estimate the human capital. The human capital determines the translational efficiency of firm’s potential to market values. In order to evaluate the relevance of the model, a pilot scale study of five biotech companies, based in Hamar and Oslo, was carried out through the use of questionnaire-based interview. Findings from interview showed that Company B has highest hrf value, while Company D has the lowest. Finally, implementing a scorecard based on this linear model could prove to be fruitful in enhancing firm’s market value