Electric car maker Tesla Motors tops Forbes’ sixth annual list of The World’s Most Innovative Companies for the second consecutive year in the September 13, 2016 issue of Forbes magazine. Salesforce retains the No. 2 spot for the second year in a row. Prior to last year, Salesforce held the top spot since the list’s inception in 2011. Regeneron Pharmaceuticals follows at No. 3. Rounding out the top five is Incyte at No. 4 and Alexion Pharmaceuticals at No. 5.
Life science and biotechnology companies occupy half of the top ten spots on the list. Investors have seen major innovations in biotechnology and expect big things for the industry.
The World’s Most Innovative Companies list demonstrates creative disruption and how new players come in, innovate and garner the attention of investors. Innovation upstarts Under Armour Inc. (No.6) and Monster Beverage Corp. (No. 7) are dethroning former innovation leaders in their field like Nike and Coca Cola (No. 93). The same could be said for Amazon (No. 11) outdistancing Walmart. Nine of the top ten companies on the list are U.S based. Investors are expecting a surge in innovation from U.S. companies.
The World’s Most Innovative Companies list consists of firms that investors feel are most likely to come up with the next big innovation. Companies are ranked by their innovation premium: the difference between their market capitalization and the net present value of cash flows from existing businesses (based on a proprietary algorithm from Credit Suisse HOLT). The difference between them is the bonus given by equity investors on the educated hunch that the company will continue to come up with profitable new growth. To be included on the list, firms need seven years of financial data and $10 billion in market cap.
The Top Ten Most Innovative Companies:
|1||TESLA MOTORS INC.||USA||Automobile Manufacturers|
|2||SALESFORCE.COM INC.||USA||Application Software|
|5||ALEXION PHARMACEUTICALS INC.||USA||Biotechnology|
|6||UNDER ARMOUR INC.||USA||Apparel, Accessories & Luxury Goods|
|7||MONSTER BEVERAGE CORP||USA||Soft Drinks|
|8||UNILEVER INDONESIA TBK PT||IDN||Household Products|
|9||VERTEX PHARMACEUTICALS INC.||USA||Biotechnology|
|10||BIOMARIN PHARMACEUTICAL INC.||USA||Biotechnology|