(Solution Download) The pharmaceutical industry spends billions of dollars each year on


The pharmaceutical industry spends billions of dollars each year on research and development.
Rather than capitalize these R&D expenditures as intangible assets, companies are required to charge them to expense in the year incurred.
Perform a keyword search of Pharmaceutical Companies using the search engine of your choice
(e.g., Yahoo, Google).
Your search will result in a list of companies that research and develop pharmaceutical products.
Select three of these companies and obtain their 10-K reports using the SEC's EDGAR system or going directly to the Web sites of the companies you choose.
Instructions
a. For each of the companies you selected, determine:
1. Total R&D expense for the most current year.
2. Total R&D expense as a percentage of total operating costs and expenses.
3. Total R&D expense as a percentage of net sales.
4. The percentage by which operating income would have increased had the entire R&D expenditure been recorded as an intangible asset instead of being charged to expense.
b. Using information from the 10-K reports, summarize briefly the kinds of drugs being researched and developed by each of these companies. To a potential investor, which company appears to be the most innovative and promising? Explain.

 







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