Patterns and Disparities in R&D Expenditure: A Study on Select Listed Indian Domestic and Multinational Pharmaceutical Companies
CS Sapana Dey
Assistant Professor, Department of Commerce with Accountancy and Finance,
Smt. P N Doshi Women’s College, SNDT Women’s University, Mumbai
sapanadey875@gmail.com
Prof. Brajaballav Pal
Professor, Department of Commerce, Vidyasagar University
pal.brajaballav@gmail.com
ABSTRACT
This study investigates the patterns and disparities in Research and Development (R&D) expenditure between selected listed Indian domestic and multinational pharmaceutical companies over a ten-year period from 2013-14 to 2022-23. The analysis distinguishes between capital R&D expenditure, representing long-term infrastructure and asset creation, and revenue (current) R&D expenditure, encompassing recurring operational research costs. Using data from company annual reports and the CMIE Prowess database, the study applies Compound Annual Growth Rate (CAGR), coefficient of variation, index construction (base year 2013-14 = 100), and independent two-sample t-tests with unequal variances to assess both trends and statistical differences between the two groups.
The findings reveal that Indian multinational pharmaceutical companies (MNCs) consistently recorded significantly higher R&D investments than their domestic counterparts across both capital and revenue categories. MNCs exhibited a 7.17% CAGR in capital R&D expenditure, while domestic firms achieved 3.45%. In contrast, domestic companies demonstrated slightly higher growth in revenue R&D expenditure (12.54%) compared to MNCs (10.71%), although the absolute values remained much lower. T-test results confirmed statistically significant differences in most years, with only 2020-21 showing convergence due to pandemic-related disruptions. The overall pattern underscores the persistent R&D intensity gap between MNCs and domestic firms, driven by differences in resource availability, innovation strategies, and global integration. The study concludes that while Indian firms are gradually improving their R&D capabilities, achieving global competitiveness requires balanced growth in both capital and current R&D expenditure, greater collaboration, and enhanced policy support for innovation-led research.
Keywords
Capital R&D expenditure, MNCs, Pharmaceutical, Revenue R&D expenditure
