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., Yahoo, Google).

 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 Web sites of the companies you choose. 

Instructions

a. For each of the companies you selected, determine:

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.