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INTERNET CASE 9.5 R&D in the Pharmaceutical Industry LO9-2 The pharmaceutical industry spends billions of dollars each year on research and development. Rather than capitalize
INTERNET CASE 9.5 R\&D in the Pharmaceutical Industry LO9-2 The pharmaceutical industry spends billions of dollars each year on research and development. Rather than capitalize these R\&D expenditures as intangible assets, companies are required to charge them to expense in the year incurred. Perform a keyword search of Pharmaceutical Companies using the search engine of your choice (e.g., Google, Bing). Your search will result in a list of companies that research and develop pharmaceutical products. Select three of these companies and obtain their 10-K reports using the SEC's EDGAR system or going directly to the websites of the companies you choose. Instructions a. For each of the companies you selected, determine the following. 1. Total R&D expense for the most current year. 2. Total R\&D expense as a percentage of total operating costs and expenses. 3. Total R\&D expense as a percentage of net sales. 4. The percentage by which operating income would have increased had the entire R\&D expenditure been recorded as an intangible asset instead of being charged to expense. b. Using information from the 10-K reports, summarize briefly the kinds of drugs being researched and developed by each of these companies. To a potential investor, which company appears to be the most innovative and promising? Explain
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