Research and development: Difference between revisions

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[[File:Cycle of Research and Development.svg|thumb|upright=1.8|Cycle of research and development]]

[[File:Spending on research and development as share of GDP, OWID.svg|thumb|upright=1.8|Spending on research and development as share of GDP (2015)]]

'''Research and development''' ('''R&D''' or '''R+D'''),<ref>{{Cite web|url=https://www.europarl.europa.eu/factsheets/en/sheet/66/policy-for-research-and-technological-development|title = Policy for research and technological development &#124; Fact Sheets on the European Union &#124; European Parliament| date=31 March 2023 }}</ref> known in some countries as '''[[OKB|experiment and design]]''', is the set of innovative activities undertaken by individuals,corporations organizations, corporations,or governments in developing new services or products.<ref name="cbo">{{cite web |title=Research and Development in the Pharmaceutical Industry |url=https://www.cbo.gov/publication/57126 |publisher=US Congressional Budget Office |access-date=29 August 2024 |date=April 2021}}</ref><ref>{{cite book |title=A Dictionary of Aviation |first=David W. |last=Wragg |isbn=9780850451634 |edition=first |publisher=Osprey |year=1973 |page=223}}</ref><ref name="investopedia">{{Cite news|url=http://www.investopedia.com/terms/r/randd.asp|title=Research And Development – R&D|author=Investopedia Staff|date=2003-11-25|work=Investopedia|access-date=2017-12-12|language=en-US}}</ref> R&D constitutes the first stage of development of a potential new service or the production process.

Although R&D activities may differ across businesses, the primary goal of an R&D department is to [[new product development|develop new products]] and services.<ref name=cbo/><ref name="investopedia"/> R&D differs from the vast majority of corporate activities in that it is not intended to yield immediate profit, and generally carries greater risk and an uncertain [[return on investment]].<ref name=cbo/><ref>{{Cite journal|last1=Yiu|first1=L. M. Daphne|last2=Lam|first2=Hugo K. S.|last3=Yeung|first3=Andy C. L.|last4=Cheng|first4=T. C. E.|date=2020|title=Enhancing the Financial Returns of R&D Investments through Operations Management|url=https://onlinelibrary.wiley.com/doi/abs/10.1111/poms.13186|journal=Production and Operations Management|language=en|volume=29|issue=7|pages=1658–1678|doi=10.1111/poms.13186|s2cid=216529963|issn=1937-5956|hdl=10397/89881|hdl-access=free}}</ref> R&D is crucial for acquiring larger shares of the market through new products.<ref name="investopedia"/> ''R&D&I'' represents R&D with innovation.<ref>EUROPEAN COMMISSION https://ec.europa.eu/competition/state_aid/cases/220403/220403_758165_5_1.pdf</ref><ref>Expenses for university R&D&I increase moderately in Spain https://www.eurekalert.org/pub_releases/2021-07/ucid-efu072221.php</ref><ref>Research, Development and Innovation (R&D&I), [[Fundação Para a Ciência e Tecnologia]] https://www.fct.pt/dsi/idi/index.phtml.en {{Webarchive|url=https://web.archive.org/web/20220907114622/https://www.fct.pt/dsi/idi/index.phtml.en |date=2022-09-07 }}</ref>

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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}}