R&amp;D Leverage- A Measure to Evaluate the Impact of R&amp;D on Earnings of Pharmaceutical Companies

Bhagwat, Yatin

doi:10.1300/j063v11n03_05

Cited by 8 publications

(9 citation statements)

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“…This is also in line with results reported by Ho et al (2005). Bhagwat et al (2001) also examined the subject matter for the case of pharmaceutical companies. Results revealed that for each 1% increase in R&D, earnings per share will increase by one-quarter percent.…”

Section: Literature Reviewmentioning

confidence: 99%

Do large firms benefit more from R&D investment?

Ibhagui¹

2019

EurJ Appl Econ

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We examine the importance of firm size in the relationship between research & development (R&D) and firm performance. Our empirical analysis, based on data drawn from Nasdaq-listed companies for the period 2002 to 2017, shows that R&D can have effects of varying magnitudes on firm performance, depending on firm size. When R&D weakens firm performance, the negative effects are more pronounced for small-sized firms, but when the impact of R&D is positive, leading to an improvement in firm performance from increased R&D, largesized firms tend to reap most of the benefits. Accordingly, we show that firm size matters in understanding the scale of the impact of R&D on firm performance.

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Section: Literature Reviewmentioning

confidence: 99%

Do large firms benefit more from R&D investment?

Ibhagui¹

2019

EurJ Appl Econ

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“…For example, Roberts () investigates the effect of sales derived from innovative products on the persistence of profits and finds that this innovation measure contributes significantly to profit persistence. Similarly, Bhagwat, DeBruine, and Gondhalekar () show that a 1% increase in R&D investment over the period 1989–1998 resulted in a 0.25% increase in earnings per share for publicly traded pharmaceutical companies. Hsieh, Mishra, and Gobeli () compare the rate of return from a dollar investment on R&D with a dollar investment on fixed assets in pharmaceutical and chemical industries.…”

Section: Hypothesis Developmentmentioning

confidence: 95%

Returns on different types of investment in the global pharmaceutical industry

Mahlich

Yurtoğlu

2018

Manage Decis Econ

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Using stock market data of 10,550 publicly listed companies between 1987 and 2012, we study the marginal returns on investment for a large sample of pharmaceutical firms and compare them with returns on investment of firms from other industries. We also disentangle effects of different types of investments on total returns, namely, investment in advertising, research and development (R&D), fixed capital, and acquisitions. Our results suggest that the return of pharmaceutical companies on total investments is higher compared with a large number of nonpharmaceutical companies for the U.S. subsample in the first half of the observation period whereas no such difference can be found for non‐U.S. firms. We also find that the return–cost ratio has declined during our observation period, with the biggest drop for European firms. R&D investments generate the highest, and advertising investments the lowest returns.

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“…Bhagwat et al . (2001) suggested that the rise in the drug price simply reflects the rising costs of developing new drugs. In their study they also indicated that the uncertainty involved in R&D processes in the pharmaceutical industry, coupled with the associated stringent regulatory approval processes, increases costs in developing new drugs.…”

Section: Literature Reviewmentioning

confidence: 99%

“…(2017); Ayaydin & Karaaslan (2014); Bhagwat et al . (2001); Sheela & Karthikeyan (2012). In this research work, Return on Equity has been considered as percentage (%).…”

Section: Conceptual Framework and Hypotheses Developmentmentioning

confidence: 99%

Is There Any Impact of R&D on Financial Performance? Evidence from Indian Pharmaceutical Companies

Nandy

2020

FIIB Business Review

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This intention of this research article is to analyze the impact of research and development (R&D) activities on the financial performance of Indian pharmaceutical companies listed with the national stock exchange (NSE) of India. Strongly balanced panel dataset of 40 sample pharmaceutical companies for the period of 1998-2019 (21 years) has been used. In the empirical analysis section: Descriptive Statistics, Bivariate Correlation Matrix, Variation Inflation Factor, Skewness/Kurtosis Tests, Breusch-Godfrey LM Test, Heteroskedasticity Test, Levin-Lin-Chu Unit-Root Test, Generalized Method of Moments (GMM) and panel regression models (Fixed Effect Model and Random Effect Model) followed by Hausman Test have been discussed. For data analysis purpose, STATA (version 12.0) software has been used. To analyze the impact of R&D on financial performance, four different financial performance related variables: Sales Turnover, Return on Assets, Return on Equity, and Market Capitalization have been used as dependent variables and these variables have been placed one after another in four different empirical models which have been estimated in this study. The study has revealed that there is a significant positive impact of R&D activities on the financial performance of Indian pharmaceutical companies listed with NSE during the study period.

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R&D Leverage- A Measure to Evaluate the Impact of R&D on Earnings of Pharmaceutical Companies

Cited by 8 publications

References 0 publications

Do large firms benefit more from R&D investment?

Do large firms benefit more from R&D investment?

Returns on different types of investment in the global pharmaceutical industry

Is There Any Impact of R&D on Financial Performance? Evidence from Indian Pharmaceutical Companies

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