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3 "research and development investment"
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Original Articles
The Determinants of Research and Development Investment in the Pharmaceutical Industry: Focus on Financial Structures
Munjae Lee, Mankyu Choi
Osong Public Health Res Perspect. 2015;6(5):302-309.   Published online October 31, 2015
DOI: https://doi.org/10.1016/j.phrp.2015.10.013
  • 1,429 View
  • 14 Download
  • 15 Citations
AbstractAbstract PDF
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.
Impact of Corporate Governance on Research and Development Investment in the Pharmaceutical Industry in South Korea
Munjae Lee
Osong Public Health Res Perspect. 2015;6(4):249-255.   Published online August 31, 2015
DOI: https://doi.org/10.1016/j.phrp.2015.07.003
  • 1,377 View
  • 18 Download
  • 3 Citations
AbstractAbstract PDF
Objectives
The purpose of this study is to analyze the influence of the corporate governance of pharmaceutical companies on research and development (R&D) investment.
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. Sample firms were those that belong to the medical substance and drug manufacturing industries. Ultimately, 786 firm-year data of 81 firms were included in the sample (unbalanced panel data).
Results
The shareholding ratio of major shareholders and foreigners turned out to have a statistically significant influence on R&D investment (p < 0.05). No statistical significance was found in the shareholding ratio of institutional investors and the ratio of outside directors.
Conclusion
The higher the shareholding ratio of the major shareholders, the greater the R&D investment. There will be a need to establish (or switch to) a holding company structure. Holding companies can directly manage R&D in fields with high initial risks, and they can diversify these risks. The larger the number of foreign investors, the greater the R&D investment, indicating that foreigners directly or indirectly impose pressure on a manager to make R&D investments that bring long-term benefits.
Analysis on Time-Lag Effect of Research and Development Investment in the Pharmaceutical Industry in Korea
Munjae Lee, Mankyu Choi
Osong Public Health Res Perspect. 2015;6(4):241-248.   Published online August 31, 2015
DOI: https://doi.org/10.1016/j.phrp.2015.07.001
  • 1,358 View
  • 13 Download
  • 13 Citations
AbstractAbstract PDF
Objectives
The aim of this study is to analyze the influence of the research and development (R&D) investment of pharmaceutical companies on enterprise value.
Methods
The period of the empirical analysis is from 2000 to 2012, considering the period after the influence of the financial crisis. Financial statements and comments in general and internal transactions were extracted from TS-2000 of the Korea Listed Company Association, and data related to stock price were extracted from KISVALUE-III of National Information and Credit Evaluation Information Service Co., Ltd. STATA 12.0 was used as the statistical package for panel analysis.
Results
In the pharmaceutical firms, the influence of the R&D intensity with regard to Tobin's q was found to be positive. However, only the R&D expenditure intensities of previous years 2 and 5 (t–2 and t–5, respectively) were statistically significant (p < 0.1), whereas those of previous years 1, 3, and 4 years (t–1, t–3, and t–4, respectively) were not statistically significant.
Conclusion
R&D investment not only affects the enterprise value but is also evaluated as an investment activity that raises the long-term enterprise value. The research findings will serve as valuable data to understand the enterprise value of the Korea pharmaceutical industry and to strengthen reform measures. Not only should new drug development be made, but also investment and support should be provided according to the specific factors suitable to improve the competitiveness of each company, such as generic, incrementally modified drugs, and biosimilar products.

PHRP : Osong Public Health and Research Perspectives