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[deleted] t1_j01irx4 wrote

Reply to comment by kirlandwater in [OC] Visualising Pfizer's latest income statement. Pharmaceutical profit margins are notoriously higher than most other industries by giteam

They do spend quite a bit on R&D normally though. It’s just that a large portion of R&D in 2022 comes from acquisitions, so it’s reported on the balance sheet instead of the income statement

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kirlandwater t1_j02k894 wrote

Acquisitions definitely aren’t R&D. They’ll expand they’re product line, yes, but those products already existed or were researched and developed without Pfizer’s M&A.

One could argue acquisitions allow for more efficient R&D as synergies between newly acquired research teams eliminate redundancies, but you’d need to look into what research PFE was doing prior to the acquisition and if they’re buying something they already were working on, and additionally you’d walk into an even stronger case against consolidating the drug makers into an oligopoly, which isn’t good for consumers.

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[deleted] t1_j03ak30 wrote

It’s not the acquisition itself, it’s the in-process R&D that transfers to Pfizer. It’s not allowed to be expensed, it has to be capitalized. They money they spend on the acquisition for R&D replaces money they would’ve otherwise spent on internal R&D

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kirlandwater t1_j03b13u wrote

Right, but that in-process R&D is just that, in process. PFE doesn’t deserve credit for this as it was already in the works prior to the acquisition. The acquired company had already spent/allocated the money.

And while it could be argued otherwise, these acquisitions continue to consolidate IP and influence upwards to a smaller number of massive companies. Which long term will not benefit consumers

Edit: even if in process R&D is included, their 10-K shows only $802m attributed to “restructuring and acsquisition related costs” for 2021. And Im not seeing it anywhere else on the income statement/balance sheet/or statement of cash flows.

For Q3, as you’ll see in OP’s infographic, in-process R&D adds another $502m for a total of $3.2b in R&D. Way below their net income of $8.6b.

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[deleted] t1_j03e15o wrote

I get what you’re saying, but when you look at the total cost a company spends on R&D, you have to include acquired R&D. A company spending money internally on R&D isn’t really different from a company spending money on a company for its R&D

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kirlandwater t1_j03eiq8 wrote

I added this as an edit on my previous comment but I’ll paste it here as well

Even if in process R&D is included, their 10-K shows only $802m attributed to “restructuring and acsquisition related costs” for 2021. This was already included in my quoted figure netting $21.98b in net revenue for last year. And Im not seeing it anywhere else on the income statement/balance sheet/or statement of cash flows.

For Q3, as you’ll see in OP’s infographic, in-process R&D adds another $502m for a total of $3.2b in R&D. Way below their net income of $8.6b.

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