 Characteristics of R&D expenditures in Japan's pharmaceutical industrySophie Nivoix and Pascal Nguyen Asia Pacific Business Review, 2012, vol. 18, issue 2, 225-240 Abstract: Characterized by a high level of R&D expenditure, pharmaceutical firms are also subject to specific risks that are reflected in their financial policies. In contrast to other firms, whose investments are directly related to internal cash flows, Japanese pharmaceutical companies do not appear to rely on this source of funds to undertake R&D investments. Our analysis reveals that R&D expenses largely depend on the firm's size and the strength of its balance sheet. More precisely, high levels of debt appear to hold back R&D expenditure, especially when debt has a short-term maturity. These results highlight the importance of funding risky investments with the adequate type of capital to avoid putting firms in financial distress. Despite the risk, R&D investments seem to be justified by the fact that they are generally associated with higher sales growth. However, the difficult conditions prevailing in Japan's pharmaceutical industry make these benefits less visible. Date: 2012 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:apbizr:v:18:y:2012:i:2:p:225-240 Ordering information: This journal article can be ordered from DOI: 10.1080/13602381.2010.540120 Access Statistics for this article Asia Pacific Business Review is currently edited by Professor Chris Rowley and Malcolm Warner More articles in Asia Pacific Business Review from Taylor & Francis Journals |
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