Research and development: Difference between revisions

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[[Statistics]] on organizations devoted to "R&D" may express the state of an [[Industry (economics)|industry]], the degree of [[competition]] or the lure of [[scientific progress|progress]].<ref>{{Cite book|url=https://books.google.com/books?id=fax-DwAAQBAJ&q=Statistics+on+organizations+devoted+to+%22R&pg=PT659|title=Biotechnology Fundamentals|last=Khan|first=Firdos Alam|date=2018-09-03|publisher=CRC Press|isbn=9781498723459|language=en}}</ref> Some common measures include: [[budget]]s, numbers of [[patent]]s or on rates of peer-reviewed [[publication]]s. Bank ratios are one of the best measures, because they are continuously maintained, public and reflect risk.

In the United States, a typical ratio of research and development for an industrial company is about 3.5% of revenues; this measure is called "[[R&D intensity]]".<ref>{{citationCite web needed|title=R&D expenditure - Statistics Explained - Eurostat |url=https://ec.europa.eu/eurostat/statistics-explained/index.php?title=R%26D_expenditure |archive-url=http://web.archive.org/web/20250705195242/https://ec.europa.eu/eurostat/statistics-explained/index.php?title=R%26D_expenditure |archive-date=March2025-07-05 2017|access-date=2025-07-28 |website=ec.europa.eu |language=en}}</ref> A [[high technology]] company, such as a computer manufacturer, might spend 7% or a [[pharmaceutical company|pharmaceutical companies]] such as [[Merck & Co.]] 14.1% or [[Novartis]] 15.1%. Anything over 15% is remarkable, and usually gains a reputation for being a high technology company such as engineering company [[Ericsson]] 24.9%, or [[biotech]] company [[Allergan]], which tops the spending table with 43.4% investment.<ref name="fn_2">All figures [http://www.innovation.gov.uk/rd_scoreboard/ UK R&D Scoreboard] {{webarchive|url=https://web.archive.org/web/20051027005836/http://www.innovation.gov.uk/rd_scoreboard/ |date=2005-10-27 }} {{As of|2006|lc=on}}.</ref> Such companies are often seen as [[credit risk]]s because their spending ratios are so unusual.{{citation needed|date=March 2017}}

Generally such firms prosper only in markets whose customers have extreme high technology needs, like certain prescription drugs or special chemicals, [[scientific instrument]]s, and [[safety-critical system]]s in medicine, [[aeronautics]] or [[military weapons]]. {{citation needed|date=March 2017}}The extreme needs justify the high risk of failure and consequently high gross margins from 60% to 90% of revenues.{{citation needed|date=March 2017}} That is, [[gross profit]]s will be as much as 90% of the sales cost, with manufacturing costing only 10% of the product price, because so many individual projects yield no exploitable product. Most industrial companies get 40% revenues only.{{citation needed|date=March 2017}}