Intellectual capital on the Indian pharmaceutical sector - a review of literature

The purpose of this paper is to highlight some of the major work done in the field of Intellectual Capital (IC) and its valuation methodology. The literature reviews discuss some of the prevailing methodology associated with identifying and measuring IC in a firm. The paper also looks into the various studies done to examine, identify and explain the relationship between intellectual capital of a firm and its market price or the difference between its market value (that of a listed firm) and its book value(Sveilby, 1997). In this attempt, the paper also highlights the work and the challenged faced by the gamut of valuation methods used today to calculate and manage intangible assets andsome of their advantages and shortcomings. The focus is however on the VAIC^TM (Ante Pulic 2004) methodology and on the pharmaceutical sector, in India and how it evaluates its IC and R&D investments.