Business magazine publication Forbes recently released its list of the world’s most innovative companies, basing its selections on a collection of financial markers including a company’s difference between market cap and net present value of cash flows from existing businesses, a figure which Forbes says is indicative of a company’s “innovation premium.” The top ten companies on the list include a group of pharmaceutical firms including Regeneron (NASDAQ:REGN), Incyte (NASDAQ:INCY), Alexion (NASDAQ:ALXN), Vertex (NASDAQ:VRTX) and BioMarin (NASDAQ:BMRN). Other companies include cloud computing company Salesforce.com (NYSE:CRM), sports apparel maker Under Armour (NYSE:UAA), energy drink maker Monster Beverage (NASDAQ:MNST) and consumer goods multinational Unilever (NYSE:UN). The top spot in Forbes list of the world’s most innovative companies is held this year by automobile and energy developer Tesla (NASDAQ:TSLA).
This list of top innovators put together by Forbes has been further refined by intellectual property analytics firm Innography to take a more objective, data-based approach in determining the world’s most innovative firms. In a report titled How Innovative Are They?, Innography takes the top five companies on Forbes’ list (Tesla, Salesforce.com, Regeneron, Incyte and Alexion, respectively) and measured them against six metrics: number of inventions; number of inventors; inventor locations; patents per inventor; and a metric Innography refers to as PatentStrength, a measure of both patent quality and filing activity.
In terms of number of inventions, Salesforce.com reigns supreme over this group of the five most innovative companies, having amassed a total of 1,071 inventions since the first year of Innography’s survey (1997). Comparatively, Salesforce.com’s patenting activities were negligible through 2009 but invention totals spiked to about 120 in 2013, nearly 180 in 2014 and about 190 in 2015. In second place in this metric is Incyte with 814 inventions, most of which the company earned between 1997 and 2002. Following them is Regeneron (502 inventions), Tesla (467 inventions) and then Alexion (201 inventions).
Salesforce.com also holds a dominating lead in terms of the number of inventors working for the company with a total of 1,326 inventors. This figure represents a sizable lead over the other companies in the study. Following Salesforce.com in number of inventors were Inycte (665 inventors), Regeneron (633 inventors) and Tesla (535 inventors). Alexion, which “did not prove to be objectively innovative” according to the Innography report, had a total of 245 inventors.
There are two notable trends developing in the Innography study which probably bear mentioning at this point. First, despite Salesforce.com’s second-place ranking in Forbes’ list of the world’s most innovative companies, it appears to be quite clear that the company employs a highly innovative workforce compared to other firms ranked highly by Forbes. Second, this data continues to support our reporting on the duplicitous nature of Tesla CEO Elon Musk towards patents. According to the Innography innovation report, Tesla earns 1.15 patents per inventor, indicating that its 535 inventors have been named in patents a total of 615 times. That’s rather curious behavior for a CEO who believes that patents are just lottery tickets for lawsuits. The number of Tesla inventions spiked in 2015, the year after Musk made his views on patents known to the world, to nearly 120 inventions. If Musk truly thinks that patents are a legal liability, he’s failing his fiduciary duty to his shareholders by wasting company resources in obtaining a patent portfolio that he even said increases the likelihood of being drawn into a lawsuit. Given the fact that much of Musk’s net worth has been built upon billions in state and federal government subsidies, Musk might someday earn the ire of not only his shareholders but the entire American tax base.
Tesla’s patenting activities is made all the more notable by the company’s low number of inventor locations/research & development centers compared to other major innovative companies. Tesla’s six inventor locations trails each of the companies in the Innography report. Regeneron had the lead with a total of 17 inventor locations, Salesforce.com had 14 location, Incyte had 13 locations and Alexion had 9 locations. In the context of the total number of Tesla inventions, it appears that the company’s R&D centers are comparatively more productive than other companies in the Innography study.
Innography’s PatentStrength metric, based on concepts raised in a July 2003 academic paper authored by Mark Lemley and others, indicates that Tesla has a very strong patent portfolio compared to other top innovation firms. In terms of overall PatentStrength measures, Tesla’s 39 percent score is third behind Salesforce.com (45 percent) and Alexion (41 percent). Since 2011, both Tesla and Salesforce.com are tied for the lead with a 30 percent score in portfolio quality from that year on. PatentStrength scores are positively impacted by forward citations, oppositions and litigation activity. As far as Tesla’s patenting activities are concerned, Innography concludes that “the metrics do show that as a younger organization with a fairly new portfolio, Tesla’s staying power looks very promising for the future.” If only the company could meet its own sales forecasts, Tesla might actually become a successful business instead of an entity with a market cap inflated by government subsidy.