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Impact of R&D activities on the financial performance: empirical evidence from Indian pharmaceutical companies

Impact of R&D activities on the financial performance: empirical evidence from Indian... This paper aims to study the impact of research and development (R&D) activities on the financial performance of Indian pharmaceutical companies listed with the national stock exchange (NSE) of India by conceptualizing R&D’s impact and financial performance framework (RDiFPF).Design/methodology/approachStrongly balanced panel data set was used for the period of 1999–2020 on the basis of secondary data subscribed from a reputable Capitalline, a corporate database as well as individual company-wise annual report extract for cross-validation.FindingsThe paper presents a novel conceptualized framework called RDiFPF with the help of financial performance related variables: sales turnover, return on assets, return on equity and market capitalization, where R&D impacts in a significant manner on the financial performance of the NSE-listed Indian pharmaceutical companies. The paper finally establishes a link between R&D activities and financial performance with respect to the Indian pharmaceutical companies listed with the NSE.Research limitations/implicationsThe suggested framework opens new dimension of research with respect to R&D, innovative practices in the pharmaceutical business and financial performance. The research can also be used in teaching and may be beneficial for framing public policy. Though the study has been carried out in Indian context, it might have implications in the emerging economies.Practical implicationsTo achieve financial returns, pharmaceutical companies need to adopt appropriate endeavour to invest substantial amount on R&D to bring innovation in the pharmaceutical business.Social implicationsA better allocation of R&D expenditure has the potential for bringing new medicine, which can cure unknown diseases and impact on the lives of the patient fraternities.Originality/valueThe contributions of the paper are twofold: on the one hand, the author proposes a framework where emphasis has been provided on the R&D investment in the pharmaceutical business and, on the other hand, significant financial performance has been shown which motivates every R&D-centric pharmaceutical companies. Notably, the novel RDiFPF framework, which has been proposed in this study, may ignite and inspire the pharmaceutical business leaders as well as entrepreneurs to take R&D and innovation in pharmaceutical business for impacting human lives as well as to enjoy significant financial returns by providing health-care solution for treating novel diseases and disorders. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Pharmaceutical and Healthcare Marketing Emerald Publishing

Impact of R&D activities on the financial performance: empirical evidence from Indian pharmaceutical companies

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References (35)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1750-6123
eISSN
1750-6123
DOI
10.1108/ijphm-08-2020-0067
Publisher site
See Article on Publisher Site

Abstract

This paper aims to study the impact of research and development (R&D) activities on the financial performance of Indian pharmaceutical companies listed with the national stock exchange (NSE) of India by conceptualizing R&D’s impact and financial performance framework (RDiFPF).Design/methodology/approachStrongly balanced panel data set was used for the period of 1999–2020 on the basis of secondary data subscribed from a reputable Capitalline, a corporate database as well as individual company-wise annual report extract for cross-validation.FindingsThe paper presents a novel conceptualized framework called RDiFPF with the help of financial performance related variables: sales turnover, return on assets, return on equity and market capitalization, where R&D impacts in a significant manner on the financial performance of the NSE-listed Indian pharmaceutical companies. The paper finally establishes a link between R&D activities and financial performance with respect to the Indian pharmaceutical companies listed with the NSE.Research limitations/implicationsThe suggested framework opens new dimension of research with respect to R&D, innovative practices in the pharmaceutical business and financial performance. The research can also be used in teaching and may be beneficial for framing public policy. Though the study has been carried out in Indian context, it might have implications in the emerging economies.Practical implicationsTo achieve financial returns, pharmaceutical companies need to adopt appropriate endeavour to invest substantial amount on R&D to bring innovation in the pharmaceutical business.Social implicationsA better allocation of R&D expenditure has the potential for bringing new medicine, which can cure unknown diseases and impact on the lives of the patient fraternities.Originality/valueThe contributions of the paper are twofold: on the one hand, the author proposes a framework where emphasis has been provided on the R&D investment in the pharmaceutical business and, on the other hand, significant financial performance has been shown which motivates every R&D-centric pharmaceutical companies. Notably, the novel RDiFPF framework, which has been proposed in this study, may ignite and inspire the pharmaceutical business leaders as well as entrepreneurs to take R&D and innovation in pharmaceutical business for impacting human lives as well as to enjoy significant financial returns by providing health-care solution for treating novel diseases and disorders.

Journal

International Journal of Pharmaceutical and Healthcare Marketing – Emerald Publishing

Published: Apr 26, 2022

Keywords: R&D; Innovation; Pharmaceutical; Drug; Patient; Health care

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