This review is based on an analysis of the 2006 financial statements of 12 major pharmaceutical entities reporting under IFRS. The aim is two-fold:
- to help pharmaceutical companies to compare their disclosure against their peers'
- to help users of financial statements to interpret and understand the methods and presentational options adopted in the financial statements.
The study does not seek to cover all of the accounting issues but key accounting topics for the industry including the capitalisation of in-house Research & Development (R&D) and the accounting of in-process R&D in business combinations and partnering agreements.
- Financial statements tend to be longer, but contain additional valuable new information
- The differing approaches in the first year make it hard and less clear to follow the financial statements
- Only sales was consistently reported by all companies. There is some inconsistency in reporting of business segmentation
- Companies have still some way to go to satisfy demands for greater quality, clarity and comparability in their disclosure.