PricewaterhouseCoopers' Trendsetter Barometer interviewed CEOs of 339 privately-held product and service companies identified in the media as the fastest growing U.S. businesses over the last five years. Surveyed companies range from approximately $5-150 million in revenues.
NEW YORK, May 2, 2006 (PRIMEZONE) -- CEOs of two-thirds of the nation's fastest-growing private companies say their business has intellectual property (IP) in the form of patents, trademarks, copyrights and trade secrets, but comparatively few are benefiting from systematically managing these assets. This is particularly evident in development of new products or services, where 35 percent "license in" intellectual property from others, but only half this number "license out" their own.
Leaving money on the table? CEOs from 68 percent of fast-growth companies say their business has intellectual property, half of which (49 percent) add that it has considerable commercial value today, or may have in the future.
Companies with IP assets:
-- Attribute 38 percent of current revenue to their IP, and
expect this contribution will increase to 42 percent over
the next 12-18 months, an eleven percent rise.
-- Are 30 percent larger than those without intellectual
property, yet have grown 75 percent faster over the past
five years.
But, although IP represents a significant source of their revenue and growth:
-- Only 31 percent with IP assets have a formal process in place
for identifying and managing current and contemplated
intellectual property -- including 39 percent of technology
companies and 23 percent of non-techs.
-- CEOs estimate that only 66 percent of their company's
intellectual property is currently being utilized, suggesting
a degree of upside potential. Utilization estimates are higher
for technology companies than non-techs (70 percent versus 61
percent, respectively).
-- Only 17 percent actively "license out" their technologies or
IP to other businesses as a source of income. For
participating companies, licensed-out IP contributes a
significant 24 percent of total revenues, which is expected
to rise to 29 percent over the next 12-18 months.
"Businesses typically use less than a quarter of their patents in their own products or processes," noted Aron Levko, leader of PricewaterhouseCoopers' intellectual property practice. "Their portfolio often contains IP covering either never-launched or obsolete products -- on which the company is paying maintenance fees. Or, patents are being held for defensive purposes that may no longer apply. While fewer manufacturing and distribution companies today conduct their own basic research and obtain patents without having a particular product in mind, those that do must closely monitor whether they are still heading in the strategic direction that would utilize these patents."
Tapping into others for new products. Although many fast-growth companies are not benefiting from "licensing out" their IP assets, a significant number, a total of 44 percent, is well-accustomed to looking to the outside for developmental synergies and new products, including:
-- 35 percent that "license in" technologies or IP from others.
Forty-six percent of those involved look upon licensing from
others as "a very important part" of their new product
development.
-- 22 percent choose to directly acquire strategic businesses
for their new products, rather than rely upon internal
development or licensing. The main attraction of such
acquisitions is speed -- 54 percent of potential acquirers say
it's faster to buy than make. Also, 45 percent note that when
acquiring they can be more certain of the products or services
they'll be getting, and 37 percent find it less costly to buy
than make.
-- 14 percent participate in joint ventures for development of
new IP, where the partners share the costs and profits --
including eight percent who say this activity is a growing
part of their business.
-- 7 percent invest in smaller, independent businesses as an
extension to their own R&D program.
"When developing new products and services, many companies have choices of complementary intellectual property they can draw upon," said Levko. "Many see little reason to expend limited resources to develop a product or component from scratch, when their needs may be satisfied by sourcing IP from others, or through collaboration."
PricewaterhouseCoopers' Trendsetter Barometer is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.
Additional information is available from Pete Collins, survey director and publisher, at 646-471-4496, or pete.collins@us.pwc.com.
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