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3. Why do companies operating within the pharmaceutical and biotechnology industries typically sustain higher ROICs than...

3. Why do companies operating within the pharmaceutical and biotechnology industries typically sustain higher ROICs than firms in the technology, hardware, and equipment industries?
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Innovations & discoveries in pharmaceutical / biotechnological industries are often protected by patents which can last upto 20 years. Hence there is barrier for other players to produce & sell the patented products (till patent period ends and product becomes generic). Thus the company holding the patent will have a competitive edge and would price its (patented) product at a premium leading to higher ROICs. Firms in technology. hardware and equipment industry often sell products that are not patent protected, and hence these can be copied by other players and lead to competitive pricing (there can still be some exceptions where products may command premium owing to strong brand recognition or technology that is not patented but still difficult to copy).

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