A Study on Impact of Profitability and R&D Intensity on R&D Expenditure in Selected Pharmaceutical Companies

Abstract

R&D plays a very important role in growth and development of a firm & brings profit to the organization. In modern era it's important to spend some amount of profit earned to generate profit for shareholder by investing in R&D. This paper examines the impact of profitability and R&D intensity on R&D expenditure of selected pharmaceutical companies. All of them have important roles in determining the ladder of the business strategy to invest in R&D activities. The data used in this study was gathered from sixteen pharmaceutical companies for the period of 2005–06 to 2014–15. The result shows that pharmaceutical firms’ profitability and R&D intensity influence significantly the firm's R&D expenditure.