How much is the company investing in inventing new products?
R&D Spend to Sales
Sector numbers
R&D-to-sales is the share of sales a company spends on research and development of new products.
In everyday life
A cook who spends part of every week testing new recipes earns less this week, but may have a hit dish next year.
How it's worked out
Example: Neem Pharma, a made-up company that makes and exports generic medicines.
In words: ₹7 of every ₹100 of sales goes into research.
Try it yourself
Move the sliders and watch the answer, the picture and the verdict change together.
₹7 of every ₹100 of sales goes into research.
- R&D spend
- The rest
Each dot is 1 of every 100 in “sales”.
Rough guide
- Low
- Moderate
- High
What's a good number?
- Low
Up to 4%
- Moderate
4% to 8%
- High
Above 8%
In pharma, research builds tomorrow's medicines. Spending lowers today's profit, so judge it by what it produces over time.
Key number in the sector guides for Pharma.
How to read it
Good signs
- Steady research spending that turns into new product launches and approvals.
Watch out for
- Research cut sharply to make one year's profit look better.
Read it with
For learning only. Example companies are made up, and the rough guides are rules of thumb, not targets. Nothing here is advice to buy or sell any stock.