BACKGROUND: Innovation in the pharmaceutical industry relies on sustained R&D investment, but the high-input, long-cycle, and high-risk characteristics of R&D activities often create financing constraints for enterprises. How to effectively incentivize enterprises to increase R&D investment through fiscal and tax policies is a focus of attention for both the government and academia. METHODS: Based on the panel data of 57 pharmaceutical companies from 2016 to 2024, this study employs a benchmark regression model to investigate the impact of government tax refunds on pharmaceutical companies' R&D investment, and conducts empirical analysis using semi-parametric estimation. RESULTS: When LTr < 15, the partial derivative graph of tax refunds on R&D investment generally exhibits a horizontal trend. When 15 ≤ LTr, it shows a linear growth trend. For companies with innovative drugs, there is a "W"-shaped fluctuation trend between tax refunds and R&D investment, while for companies without innovative drugs, the impact of tax refunds on pharmaceutical companies' R&D investment exhibits a "U"-shaped fluctuation trend. CONCLUSIONS: There is a certain optimal range for the promotional effect of tax refunds on pharmaceutical companies' R&D investment. Compared with companies without innovative drugs, companies with innovative drugs are more sensitive to tax refunds on R&D investment.
Xu et al. (Thu,) studied this question.