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Title: | Investing in innovation: The relationship between R&D spending and financial performance in the European pharmaceutical industry |
Author: | Asad, Arif Ibne; Homolka, Lubor |
Document type: | Peer-reviewed article (English) |
Source document: | Journal of Eastern European and Central Asian Research. 2023, vol. 10, issue 7, p. 1006-1026 |
ISSN: | 2328-8272 (Sherpa/RoMEO, JCR) |
DOI: | https://doi.org/10.15549/jeecar.v10i7.1368 |
Abstract: | The pharmaceutical industry is highly capital and knowledge-intensive, spending approximately 15% of its total revenue on research and development (R&D). This study aims to find the relationship between pharmaceutical businesses' financial performance and investments made in drug research and development in Europe. The study employs regression analysis with a time-lag effect of R&D spending on operating earnings. It is hypothesised that the investment expenditure of the previous year’s R&D investment will significantly and concurrently impact the economic-financial performance of the country and the findings show a strong and positive link between the previous year’s R&D expenditure and the current year's operating profit in the European countries, providing convincing evidence that R&D investments will pay off financially in the years ahead for the development of pharmaceuticals. The study also conducted diagnosis tests for the validation of the estimated models. |
Full text: | https://ieeca.org/journal/index.php/JEECAR/article/view/1368 |
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