Returns on different types of investment in the global pharmaceutical industry

Mahlich, Jörg; Yurtoğlu, B. Burçin

doi:10.1002/mde.2977

Cited by 6 publications

(3 citation statements)

References 94 publications

(89 reference statements)

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“…Large facilities and costly machinery are necessary for drug production, along with a level of high R&D investment, indicating an economics of scale of the large existing company [20]. Approximately 7.1% of pharmaceutical companies' upfront R&D costs were made between 1987 and 2012 [21]. Moreover, the industry has been experiencing increasing regulatory requirements as well as the complexity of supply chain and biopharma operations, showing that early players in the industry are well-positioned to have a competitive advantage by overcoming legal barriers and seeking stable suppliers [22].…”

Section: Threats Of New Entrantsmentioning

confidence: 99%

Financial statements analysis on Pfizer

Wang

2024

SHS Web Conf.

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Financial reporting is a snapshot of the business activities and financial status of companies and is widely used for various purposes by different stakeholders, including insiders and outsiders of the company. The quality and relevance of the financial reporting made by the company’s managers with mixed incentives largely influenced investment decision-making, resulting in information asymmetry in the capital market. The financial statement analysis (FSA) plays an important part to mitigate the information gap and assists investors in making unbiased investment decisions, which consists of four parts: business strategy analysis, accounting analysis, financial analysis and prospective analysis. This paper analyses inside information from Pfizer Inc. using FSA based on the financial reporting from the financial year of 2019 to 2022 (FY2019 to FY2022) in conjunction with other supplement materials. This paper finds Pfizer primarily takes the product differentiation strategy as its key profit driver, and the related accounting policies and estimations generally reflect the economic reality. The short-term liquidity of Pfizer should be enhanced, and the firm’s market value is overvalued compared to its intrinsic value on December 20, 2022.

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Section: Threats Of New Entrantsmentioning

confidence: 99%

Financial statements analysis on Pfizer

Wang

2024

SHS Web Conf.

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“…Several studies have examined the association between R&D investments and various firm characteristics like profitability in the pharmaceutical industry (Pal & Nandy, 2019;Rao, 2020;Romasanta, van der Sijde, & van Muijlwijk-Koezen, 2020), financial performance (Nandy, 2020;Sharma, 2012), and equity returns (Mahlich & Yurtoglu, 2019). They claim that R&D expenses significantly impact on firm's profitability, financial performance, and stock returns.…”

Section: Randd Investment and Firm Factor Characteristicsmentioning

confidence: 99%

EVALUATING R&D PREMIUM IN THE INDIAN HEALTH AND PHARMACEUTICALS INDUSTRIES

Sharma

Pyati²

2022

jmk

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The economic advantages of research and development (R&D) investment have shown conflicting results in empirical studies. This study aimed to examine a different approach, evaluating R&D premium and cross-sectional variability of equity returns, a particular case for the Indian healthcare industry. The primary motivation for this study arrived from the size of the healthcare industry, the world's third-largest and India's largest industry, and the investment made in R&D activities. Results demonstrated that India's annualized R&D premium was significantly greater than the current value, investment, profitability, and momentum premiums. It indicated that the new R&D risk factor in pricing models is a primary reference for Indian equity investors, particularly for companies with R&D spending. Results were robust in evaluating portfolio return using univariate and multivariate tests. Findings suggested that R&D augmented models outperformed conventional pricing models, denoting that the R&D factor undoubtedly revealed priced element and vital risk factor in designing pricing models for emerging countries like India. When adjusting to R&D investment and trading strategies, policymakers, and financial professionals should hereby evaluate their risk-return implications

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“…In parallel to the decreasing productivity, returns of investments in the pharmaceutical industry have dropped, a recent study found, analysing global stock market data from 1987 to 2012 [7]. In the second half of the observation period European pharmaceutical firms could not even earn their cost of capital and were actually destroying economic value, i.e.…”

Section: Introductionmentioning

confidence: 99%

Can adaptive clinical trials help to solve the productivity crisis of the pharmaceutical industry? - a scenario analysis

2021

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Aim The productivity of pharmaceutical research and development (R&D) investments is declining due to high failure rates in clinical research. Recently, the US Food and Drug Administration (FDA) acknowledged that adaptive designs can make drug development more efficient and less costly. Our objective is to simulate cost-saving effects and estimate the impact on global R&D expenditures as well as possible outcomes measured in life-years gained. Methods Based on published drug-development cost data we calculate potential cost savings derived from variations in clinical success rates that result from employing adaptive trial designs. In a subsequent step we estimate how those cost changes affect global R&D expenditures and outcomes. Results Our calculations indicate that an adaptive trial design with the potential to increase success rates of clinical trials by 4 percentage points could lower development costs for a new drug from 2.6 to 2.2bn USD. On a global scale, this cost reduction would free up an additional 4.2bn USD for investment into pharmaceutical R&D to bring about drug innovations that in turn would be capable of generating up to 3.5 million life-years. Conclusion New clinical trial designs are crucial to improving productivity within the pharmaceutical industry and to fostering a sustainable health-care system.

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Returns on different types of investment in the global pharmaceutical industry

Cited by 6 publications

References 94 publications

Financial statements analysis on Pfizer

Financial statements analysis on Pfizer

EVALUATING R&D PREMIUM IN THE INDIAN HEALTH AND PHARMACEUTICALS INDUSTRIES

Can adaptive clinical trials help to solve the productivity crisis of the pharmaceutical industry? - a scenario analysis

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