Research & Development

The term research and development (R&D) refers to work that is done in order to better understand the nature, function or understanding of a topic or product in order to gain knowledge and find new applications for existing products or to develop new and innovative products. This is usually performed by corporations, government agencies, and research or academic institutions.

New product design and development is essential for the survival and growth of many companies, as markets and consumers’ tastes are fickle and the competition can be fierce.

In order to stay relevant in a fast changing marketplace, firms have to constantly revise and expand their range of product offerings. Therefore, research and development is of great economic importance as companies fight to maintain their market share, though it may mean forgoing current profits in favor of potential future performance and returns.

Research and development is most often associated with the technology industry, as well as with science and in particular with healthcare and the development of new pharmaceuticals, diagnostics or medical devices that are safe and effective. For instance, drug makers must constantly search for the next big blockbuster drug, since the products they currently have on the market will eventually lose their patent protection and be vulnerable to generic competition. So they spend huge amounts of money on R&D because without a promising drug pipeline their revenue stream will ultimately dry up.