The impact of research and development and marketing costs on the profitability of pharmaceutical companies of Tehran Stock Exchange using panel data 2001-2013

Abstract

Purpose

The main aim of this study is to investigate the effects of marketing and costs and research and development (R&D) investments on profitability of pharmaceutical companies of Iran.

Design/methodology/approach

In this study, pharmaceutical companies that have been accepted in Tehran Stock Exchange until March 19, 2013 were investigated. Random-effect panel data estimator was used for this purpose.

Findings

The findings indicate that variables such as company size, capital-to-total asset ratio and debt-to-asset ratio have an effect on profitability. But, company life, advertising cost and R&D investment are ineffective on profitability.

Originality/value

Legal issues like not having patent law and pricing mechanism are reasons for the ineffective relationship between R&D and marketing costs and its effect on profitability of the Iran pharmaceutical industry.

Citation

Bayazidi, Y., Homaie Rad, E., Mojahedian, M., Toroski, M., Nabizadeh, A., Farahmand, P. and Felezi Nasiri, B. (2016), "The impact of research and development and marketing costs on the profitability of pharmaceutical companies of Tehran Stock Exchange using panel data 2001-2013", International Journal of Pharmaceutical and Healthcare Marketing, Vol. 10 No. 4, pp. 467-476. https://doi.org/10.1108/IJPHM-06-2015-0029