R&D in the Pharmaceutical Industry

The Pharmaceutical industry appends 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 a 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.