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- Title
INVESTING IN INNOVATION: THE RELATIONSHIP BETWEEN R&D SPENDING AND FINANCIAL PERFORMANCE IN THE EUROPEAN PHARMACEUTICAL INDUSTRY.
- Authors
Asad, Arif Ibne; Homolka, Lubor
- 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.
- Subjects
EUROPE; FINANCIAL performance; CORPORATE profits; BUSINESS revenue; PHARMACEUTICAL industry; DRUG development; CAPITAL investments
- Publication
Journal of Eastern European & Central Asian Research, 2023, Vol 10, Issue 7, p1006
- ISSN
2328-8272
- Publication type
Article
- DOI
10.15549/jeecar.v10i7.1368