R&D Spend as % of Revenue
Total research and development expenditure as a percentage of total revenue
What is R&D Spend as % of Revenue?
R&D spend as a percentage of revenue is the share of revenue invested in research and development. It shows how much a company puts into creating future products.
For pharmaceutical and life sciences companies, it is often very high, reflecting the long and costly process of developing new treatments.
How this KPI is measured
- Function
- Finance
- Sub-function
- R&D Investment
- Industry
- Pharma & Life Sciences
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Quarterly / Annual
- Formula
- (Total R&D spend / Total revenue) × 100
How to calculate it
Divide total research and development spend by total revenue, and multiply by 100.
For example, if R&D spend was 2,000,000,000 and revenue was 10,000,000,000, the share is 20%.
Compare with similar companies and over time, and consider pipeline results as well as spend.
Where it is used
Reviewing innovation investment
Check commitment to research.
Benchmarking
Compare with peers.
Reporting to investors
Show pipeline funding.
How to improve it
Tips and common mistakes
- Spend is an input, not a result.
- A high share can reflect a smaller revenue base.
- Consider partnerships to share cost.
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