Wow, where do I start?
<<< R&D spending has zero value, as soon as it is spent. It does, however, have a (highly uncertain) potential future value. >>> I think this violates the time value of money principle of finance. If a company and research has future value, it has present value. The more uncertain it's future value the higher the require rate of return demanded by investors and the lower the present value, but the present value is not zero. (see discount cash model)
<<< You spend the money, and your ability to predict whether it leads to a profitable product, is nil >>>
I would like to see the statistical calculation that yields NIL. A large portion of R&D spend occurs during clinical trials not in the lab. Of 5000 compound evaluated in preclinicals (labs), on average 5 will enter costly clinical trials.
Of the 5 drugs that enter clinical trials, 1 will on average be approved. I believe 70+% of drugs that enter Phase III clinical trials are approved. I would suggest that investment in the costly R&D of clinical trials, statistically, allows you the ability to predict a value above NIL.
I often read the literature at the medical library to help with my predictions. There is never a line to get the journals.
I guess the doctors are all out getting lottery tickets. |
