One Comment on ““Measure what is measurable, make measurable what is not”: Accounting for Intangibles at Dr. Reddy’s Laboratories”

  1. Markfin Says:

    Valuation of intangible assets is not new in India – the Institute of Chartered Accountants of India issued the “Accounting Standard 26” for intangible assets in 2002. In fact, India is ranked third in the world in intangible assets as a proportion of Total Enterprise Value. This reflects the prominence of knowledge-intensive industries like software and pharmaceuticals in India’s economy. However, the accounting of intangibles poses several challenges. In the pharma sector, for instance, developing a generic drug involves huge R&D expenses. But given the time involved in securing approval for new products, revenues typically start flowing in much later, often leading to discrepancies between costs and revenues in any given fiscal year.

    Another concern for many firms is that intangible assets hold their secret sauce for success, and hence disclosing their assets may affect their competitive advantage adversely. Considering these challenges, the commitment of firms like Dr. Reddy’s towards systematizing their intangible accounting system is truly commendable.

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