The Research About The Relationships Between R&D Investment And Business Performance Of Pharmaceutical Industry

Technological innovation is the basis of enterprise survival and development. And R&D investment is the power source of technological innovation. In the context of globalization, Businesses will face with severe competition and challenges. At this time in order to survive and development enterprises are turning their attention to technology innovation, and expect to achieve new product development and expand the market demand through technological innovation. In this context more and more enterprises begin to realize the importance of R&D input on enterprise survival and development. But at present China’s R&D investment business efforts generally Insufficient, there is still a big gap between China and developed countries on R&D investment. This gap has become a bottleneck to improve the levels of china’s science and technology competitiveness. Enterprise is the main body of R&D investment. So enhancing the research on the relationship between R&D input and performance can make the enterprise understand the importance of R&D investment fully. In China, the pharmaceutical manufacturing industries need large-scale R&D investment and technological innovation. Therefore, pharmaceutical manufacturing enterprises as example to study the relationship of R&D investment and organizational performance are very important.The adoption of theoretical research and empirical analysis methods, Based on the data-based panels from2006to2009of pharmaceutical manufacturing industries as samples, the R&D investment intensity as explanatory variables, operating profit margin and revenue growth as the dependent variable, the size of enterprises, cash strength, debt ratio, capital expenditure rates as control variables, a linear regression model was establish to analyze the correlation ship between R&D input and performance of pharmaceutical manufacturing enterprises. And use of pharmaceutical manufacturing R&D investment and the relationship between performances were analyzed. Empirical studies have shown:Firstly, the empirical research shows that there is no significant negative correlation between pharmaceutical manufacturers’ current R&D investment and current operating profit margin. But there is a significant positive correlation between the current operating profit margin and delay two years of the R&D investment. This kind of correlation indicating that the R&D investment strength makes the operating profit margin has lagged effects, and the lag of two years. Secondly there is a significant positive correlation between pharmaceutical manufacturing R&D input and revenue growth. But this relationship is not obvious has the hysteresis quality. This shows enterprises must make a choice between short-term profits and long-term growth in R&D input.Finally, based on the research conclusion, this article makes the following recommendations. Firstly, the Government should establish a mechanism to encourage enterprises to increase R&D investment. Secondly, the government should strengthen the information disclosure of pharmaceutical manufacturing enterprises R&D investment. This will benefit both of academic research and business growth. Thirdly, the Government should perfect the market economic laws and regulations with emphasis on IPR protection, which can be encourage business investment in continuous innovation. Fourthly, the pharmaceutical manufacturing enterprises should perfect their own systems and establishment of the innovation incentive mechanism. System and the various rules and regulations, which took the initiative, will facilitate the conduct of internal innovative activities and enterprises but also in R&D investment. The pharmaceutical manufacturing enterprises also make some market research to understand customer needs so as to have specific and purpose of the research and development work.