The Determinants of Research and Development Investment in the Pharmaceutical Industry: Focus on Financial Structures

Munjae Lee, Mankyu Choi

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)

Abstract

Objectives: This study analyzes the influence of the financial structure of pharmaceutical companies on R&D investment to create a next-generation profit source or develop relatively cost-effective drugs to maximize enterprise value. Methods: The period of the empirical analysis is from 2000 to 2012. Financial statements and comments in general and internal transactions were extracted from TS-2000 of the Korea Listed Company Association (KLCA), and data related to stock price is extracted from KISVALUE-III of NICE Information Service Co., Ltd. Stata 12.0 was used as the statistical package for panel analysis. Results: The current ratio had a positive influence on R&D investment, the debt ratio had a negative influence on R&D investment, and return on investment and net sales growth rate did not have a significant influence on R&D investment. Conclusion: It was found in this study that the higher liquidity ratio, the greater the R&D investment. The stability of pharmaceutical companies has a negative influence on R&D investment. This finding is consistent with the prediction that if a company faces a financial risk, it will be passive in R&D investment due to its financial difficulties.

Original languageEnglish
Pages (from-to)302-309
Number of pages8
JournalOsong Public Health and Research Perspectives
Volume6
Issue number5
DOIs
Publication statusPublished - 2015 Oct 1

Keywords

  • Financial structure
  • Panel study
  • Pharmaceutical company
  • Research and development investment

ASJC Scopus subject areas

  • Public Health, Environmental and Occupational Health
  • Infectious Diseases

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