The pharmaceutical industry is proof of the profit-powers of patents. There are no controls on how much we must fork out to stay well. Exorbitant drug prices have large parts in the ongoing health-insurance crisis.
Patent protection does not last forever. No corporation can be certain that the flow of new inventions will flow to market unchecked. The very nature of research implies that a company may suffer a dry spell with respect to viable new molecules. Stock investors should back stocks of companies that have the competencies to thrive without patent protection.
Corporations from the third world are arguably more skilled at branding generics than their American and European peers. Countries such as India have not had product patents in place for decades. Global companies in consumer goods have a similar situation, as neither soaps nor cell phones are made and sold under any exclusive covers.
Process is invaluable know-how, and you don’t need a patent to keep it confidential. Succession planning is an example. Companies that have new leaders ready in time are more likely to sustain dividend payments. Abrupt recruitments for key positions are signs of business crises. Investors should worry about such matters because it can skew the Price to Earnings Ratio in a flash.
Sourcing strategies, logistic networks, and customer engagement are other business processes that thrive below radars of competitors and market analysts. It is not easy to evaluate them, but the successful stock investor will find ways of finding such information and using it to make the best picks.
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