Intangible Asset

The proportion of a company's total assets or total investment that is attributable to intangible assets. A high intangible asset intensity — common in technology, pharmaceutical, and professional services firms — indicates that value creation is driven primarily by knowledge, data, and relationships rather than physical capital.

Long-term assets held by a business for use in production, supply of goods and services, or administrative purposes, expected to provide economic benefits beyond a single accounting period. Capital assets include both tangible assets (property, plant, equipment) and intangible assets (patents, software, brand value, customer relationships).

Legal rights that grant the creator of original works exclusive control over their reproduction, distribution, and adaptation. In a business context, copyrights protect software code, written content, marketing materials, training programmes, and creative works as intangible assets.

An intellectual property holding company — a legal entity established specifically to own, manage, and licence a group's intellectual property assets. IP Holdcos are used in lending structures to ring-fence IP from the operating company's other creditors and liabilities, creating a cleaner security package for lenders.

Firms that provide specialist knowledge-based services such as consulting, engineering, IT services, legal advisory, and financial analysis. KIBS firms are characterised by high intangible asset intensity, with the majority of their enterprise value derived from human capital, client relationships, proprietary methodologies, and reputation.

Contracts that grant permission to use intellectual property (patents, trademarks, software, content) in exchange for fees or royalties. Licensing is both a monetisation strategy for IP owners and an intangible asset for licensees who gain access to proprietary technology or brand rights.

A structured finance technique in which a company's future revenue streams are packaged into a financial instrument that can be sold to investors or used as collateral for lending. In the context of intangible asset finance, revenue securitisation allows businesses to monetise predictable revenue generated by their intangible assets — software subscription income, licensing fees, franchise royalties, data access fees — without selling the underlying assets or diluting equity.

Confidential business information that provides a competitive advantage, including formulas, processes, methods, customer lists, and supplier terms. Unlike patents, trade secrets are not publicly disclosed and are protected through confidentiality agreements and security measures rather than registration.

AI and Total Factor Productivity: Macro-Economic Implications

Total factor productivity is the ultimate measure of technology's economic contribution, yet AI's impact on TFP remains undetectable in aggregate data. This article examines why, what the macro-economic models predict, and what it means for long-term investment strategy.

What intangible assets matter most in pharmaceutical and biotech companies?

Pharma and biotech value is concentrated in patented compounds, in-process R&D pipeline, regulatory approvals (marketing authorisations), and proprietary manufacturing processes.

What is the IAS 38 revaluation model for intangible assets?

IAS 38 permits revaluation of intangible assets to fair value if an active market exists, but this is rarely used in practice because active markets for most intangible assets do not exist.

How does the adoption of AI affect overall company valuation?

AI adoption affects company valuation through revenue enhancement, cost reduction, competitive moat creation, and intangible asset accumulation — but premature AI claims without substance (AI washing) can destroy credibility.