Amidst the wave of patent expirations, pennies per share are now a big deal in Pharma-companies are looking to cut marketing and hold R&D more or less flat. And thus the accounting issues that determine what gets expensed and what gets capitalized have grown in importance. That's why a new FASB rule change on expensing of purchased R&D is causing concern: suddenly R&D will look like it's getting more expensive.
Until relatively recently, pennies per share didn't matter much to drug companies. They could keep increasing marketing and R&D expenses -- and earnings would keep pace. Pipelines didn't, but all that R&D spending promised that they'd catch up too.
But amidst the wave of patent expirations, pennies are now a big deal in Pharma—companies are looking to cut marketing...
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