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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
  • 2,833 View
  • 16 Download
  • 22 Crossref
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.

Citations

Citations to this article as recorded by  
  • How Indian Pharma Industry Performed in the Last Decade? Impact of a Non-macroeconomic Variable and Financial Distress
    Pooja Singh, Anindita Chakraborty
    Jindal Journal of Business Research.2023; 12(2): 143.     CrossRef
  • How structural changes are driving R&D activity in India’s pharmaceutical sector
    Niloufer Sohrabji, Kristen Marquette
    Journal of Pharmaceutical Health Services Research.2023; 14(3): 256.     CrossRef
  • Patent and Marketing Exclusivities 101 for Drug Developers
    Bryan Oronsky, Scott Caroen, Franck Brinkhaus, Tony Reid, Meaghan Stirn, Raj Kumar
    Recent Patents on Biotechnology.2023; 17(3): 257.     CrossRef
  • The driving process of technological innovation in construction: a firm-level CDM analysis
    Zheng Gong, Nannan Wang
    Construction Innovation .2022; 22(2): 222.     CrossRef
  • Envisioning the challenges of the pharmaceutical sector in the Indian health-care industry: a scenario analysis
    Giuseppe Festa, Ashutosh Kolte, Maria Rosaria Carli, Matteo Rossi
    Journal of Business & Industrial Marketing.2022; 37(8): 1662.     CrossRef
  • Can the Profitability of Medical Enterprises Be Improved After Joining China's Centralized Drug Procurement? A Difference-in-Difference Design
    Yu-Fei Hua, Jin Lu, Bing Bai, Han-Qing Zhao
    Frontiers in Public Health.2022;[Epub]     CrossRef
  • Ambidexterity's influence on export strategy development—The case of the Indian pharmaceutical industry
    Ashutosh Kolte, Giuseppe Festa, Matteo Rossi, Alkis Thrassou, Demetris Vrontis, Michael Christofi
    Thunderbird International Business Review.2022; 64(5): 465.     CrossRef
  • Local pharmaceutical research and development capacity in a developing country: a qualitative exploration of perspectives from key stakeholders in Ethiopia
    Muluken Nigatu Selam, Samuel Abera, Helen Geremew, Eskinder Eshetu Ali
    Journal of Pharmaceutical Policy and Practice.2022;[Epub]     CrossRef
  • Optimization and Quest of HPMC loaded Stavudine Controlled Release Dosage Development by Central Composite Design utilizing Reduced Factorial Screening Technique
    Jyothsna Gangolu, Sandyapakula Balaiah, Sisir Nandi, Harekrishna Roy
    Brazilian Journal of Pharmaceutical Sciences.2022;[Epub]     CrossRef
  • The contribution of intellectual capital to financial stability in Indian pharmaceutical companies
    Giuseppe Festa, Matteo Rossi, Ashutosh Kolte, Luca Marinelli
    Journal of Intellectual Capital.2021; 22(2): 337.     CrossRef
  • Factors affecting profitability of pharmaceutical company: an Indonesian evidence
    Harianto Lim, Rofikoh Rokhim
    Journal of Economic Studies.2021; 48(5): 981.     CrossRef
  • Impact of Monetary Policy Uncertainty on R&D Investment Smoothing Behavior of Pharmaceutical Manufacturing Enterprises: Empirical Research Based on a Threshold Regression Model
    Jingyuan Yang, Ling Wang, Ziyuan Sun, Fangming Zhu, Yihui Guo, Yan Shen
    International Journal of Environmental Research an.2021; 18(21): 11560.     CrossRef
  • Drivers of ICT investments in bakery and sugar confectionery processed food sub-sector in India
    Navyashree GR, Savita Bhat
    Journal of Agribusiness in Developing and Emerging.2020; 10(2): 191.     CrossRef
  • Gouvernance et intensité d’innovation dans les ETI innovantes
    Léopold Djoutsa Wamba, Éric Braune, Frédéric Teulon
    Management & Avenir.2020; N° 118(4): 111.     CrossRef
  • MALİYET YAPIŞKANLIĞININ YENİDEN GÖZDEN GEÇİRİLMESİ: BORSA İSTANBUL İMALAT SANAYİ ÖRNEĞİ
    Mehmet Emin KARABAYIR
    Muhasebe ve Vergi Uygulamaları Dergisi.2019; 12(2): 317.     CrossRef
  • Bioaugmentation effect of Aeromonas hydrophila and Pseudomonas putida on kinetics of activated sludge process in treating pharmaceutical industrial wastewater
    Marija Vuković Domanovac, Monika Šabić Runjavec, Ernest Meštrović
    Journal of Chemical Technology & Biotechnology.2019; 94(8): 2721.     CrossRef
  • Replicating the R&D investments and financial structure relationship: evidence from Borsa İstanbul
    Nasif Ozkan
    Management Review Quarterly.2018; 68(4): 399.     CrossRef
  • Firm level R&D intensity: evidence from Indian drugs and pharmaceutical industry
    Shilpi Tyagi, D. K. Nauriyal, Rachita Gulati
    Review of Managerial Science.2018; 12(1): 167.     CrossRef
  • Impact of investment in intangible assets on corporate performance in India
    Aparna Bhatia, Khushboo Aggarwal
    International Journal of Law and Management.2018; 60(5): 1058.     CrossRef
  • Relation of R&D expense to turnover and number of listed companies in all industrial fields
    Jun-Hwan Park, Bangrae Lee, Yeong-Ho Moon, GyuSeok Kim, Lee-Nam Kwon
    Journal of Open Innovation: Technology, Market, an.2018; 4(1): 1.     CrossRef
  • Policy to encourage the development of antimicrobials
    Ayman Chit, Paul Grootendorst
    International Journal of Health Governance.2018; 23(2): 101.     CrossRef
  • O IMPACTO DOS INVESTIMENTOS EM P&D NO DESEMPENHO DAS EMPRESAS: APLICAÇÕES NO USO DE REGRESSÃO QUANTÍLICA COM VARIÁVEIS INSTRUMENTAIS
    Leonardo Andrade Rocha, Ahmad Saeed Khan, Patrícia Verônica Pinheiro Sales Lima, Maria Ester Soares Dal Poz, Carlos Alano Soares de Almeida
    Revista de Economia Contemporânea.2018;[Epub]     CrossRef
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
  • 2,907 View
  • 20 Download
  • 4 Crossref
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.

Citations

Citations to this article as recorded by  
  • EFFECT OF CORPORATE GOVERNANCE PRACTICES ON R&D AND INNOVATION COSTS: A CASE STUDY ON BORSA İSTANBUL
    Hüseyin Ali KUTLU, Bekir GEREKAN
    Muhasebe ve Vergi Uygulamaları Dergisi.2021; 14(3): 967.     CrossRef
  • Corporate governance and the environment in the health sector: Systematic literature review
    Isabel Cristina Panziera Marques, Zélia Maria da Silva Serrasqueiro Teixeira, Fernanda Maria Duarte Nogueira
    Journal of Governance and Regulation.2020; 9(2): 8.     CrossRef
  • Gouvernance et intensité d’innovation dans les ETI innovantes
    Léopold Djoutsa Wamba, Éric Braune, Frédéric Teulon
    Management & Avenir.2020; N° 118(4): 111.     CrossRef
  • Differentiation of innovation strategies based on pharmaceutical licensing agreements: Insight from Korean pharmaceutical firms
    Chie Hoon Song, Jens Leker
    Technology Analysis & Strategic Management.2019; 31(2): 169.     CrossRef
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
  • 2,901 View
  • 15 Download
  • 15 Crossref
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.

Citations

Citations to this article as recorded by  
  • R&D investment and corporate total factor productivity under the heterogeneous environmental regulations: evidence from Chinese micro firms
    X. Ding, Y. Zhang, Y. Fu, Z. Xu
    International Journal of Environmental Science and.2024;[Epub]     CrossRef
  • A new perspective for European SMEs’ innovative support analysis: Does non-financial support matter?
    Solomon Gyamfi, Wolfgang Gerstlberger, Viktor Prokop, Jan Stejskal
    Heliyon.2024; 10(1): e23796.     CrossRef
  • R&D activity and firm performance: mapping the field
    Kseniia Boiko
    Management Review Quarterly.2022; 72(4): 1051.     CrossRef
  • Pharmaceutical industry in export marketing: a closer look at competitiveness
    Mehdi Mohammadzadeh, Nima Bakhtiari, Reza Safarey, Tayebeh Ghari
    International Journal of Pharmaceutical and Health.2021; 13(3): 331.     CrossRef
  • The effect of intangible assets on sustainable growth and firm value – Evidence on intellectual capital investment in companies listed on Bucharest Stock Exchange
    Catalin Ionita, Elena Dinu
    Kybernetes.2021; 50(10): 2823.     CrossRef
  • AR-GE GİDERLERİ İLE KÂRLILIK VE BÜYÜME ARASINDA NEDENSELLİK İLİŞKİSİ: BIST ÜZERİNE BİR İNCELEME
    Mehmet DİKİCİ, Kadir GÜRDAL
    Muhasebe ve Vergi Uygulamaları Dergisi.2021; 14(3): 1193.     CrossRef
  • R&D Investments, Debt Capital, and Ownership Concentration: A Three-Way Interaction and Lag Effects on Firm Performance in China's Pharmaceutical Industry
    Chih-Yi Su, Yao-Ning Guo, Kuang-Cheng Chai, Wei-Wei Kong
    Frontiers in Public Health.2021;[Epub]     CrossRef
  • R&D SPENDING AND FINANCIAL PERFORMANCE: AN INVESTIGATION IN AN EMERGING MARKET
    Nasıf ÖZKAN
    International Journal of Management Economics and .2021;[Epub]     CrossRef
  • The persistence of current market valuation of future capital investment
    Nancy Beneda
    Journal of Corporate Accounting & Finance.2020; 31(3): 163.     CrossRef
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    Ning Ai, Marc Kjerland, Cynthia Klein-Banai, Thomas L. Theis
    Journal of Cleaner Production.2019; 212: 1357.     CrossRef
  • Analysing future change in the EU's energy innovation system
    Yeong Jae Kim, Charlie Wilson
    Energy Strategy Reviews.2019; 24: 279.     CrossRef
  • A review of three years' experience of the first pharmacometrics company in Korea
    So Jin Lee, Sangil Jeon
    Translational and Clinical Pharmacology.2019; 27(4): 149.     CrossRef
  • The impact of inter-industry R&D technology spillover on carbon emission in China
    Jianling Jiao, Yufei Yang, Yu Bai
    Natural Hazards.2018; 91(3): 913.     CrossRef
  • Characteristics of Corporate R&D Investment in Emerging Markets: Evidence from Manufacturing Industry in China and South Korea
    Jian Xu, Jae-Woo Sim
    Sustainability.2018; 10(9): 3002.     CrossRef
  • R&D Investments, EPO Patent Applications and the Economic Heterogeneity within the EU
    Zuzana Potužáková, Jan Öhm
    Review of Economic Perspectives.2018; 18(2): 177.     CrossRef

PHRP : Osong Public Health and Research Perspectives