Is It Normal for a Medical Research Company Not To Show Its Research and Development Expenses? - A company’s gross margin has been in long-term decline. The average rate of decline per year is -4.6%. Of course, this is a cause for concern.

At the same time, its operating margin is expanding at the average rate of 3.1% per year, which is excellent. But its income statement doesn’t have a dedicated expense for R&D. When I tried to find out why its operating income is improving, I saw that “Other operating expense” had been declining at the average rate of 10.5% per year. This is good, unless R&D is hidden inside “Other operating expense”. I wonder if they are cutting down on their R&D, which may not be a good thing in the long run, considering it’s a medical research company.

So, in summary:

\- Gross margin is declining at a worrying rate.

\- Operating margin is expanding at a good rate.

\- There is no row in the income statement dedicated to ‘Research and Development”, even though this is a medical research company. I checked its peers, and they have a dedicated expense for “Research and Development”

\- “Other operating expense” is declining at a very good rate, which is a good thing.

\- But I don’t know if R&D spending is included in “Other operating expense”, which could mean they’re cutting their R&D spending, which could be detrimental to the long-term success of such a company, considering it’s a medical research company. \*

What do you think?