Pharma accounting
Plain-English guides to the accounting issues pharma companies face, each with a worked example from the industry.
Pharma accounting guides
- Pharma accounting: the key IFRS issues3 minute readPharma accounting explained: R&D under IAS 38, licensing and milestones, royalties, rebates and chargebacks, acquired in-process R&D and trial failures.
- When pharma capitalises R&D4 minute readWhen pharma R&D is capitalised under IAS 38: technical feasibility and regulatory approval, innovators versus generics, amortisation and US GAAP's ASC 730.
- Licensing deals and milestone payments4 minute readDrug licensing and milestone payments under IFRS 15: upfront fees, right-to-use licences, development and regulatory milestones, sales milestones, an example.
- Sales-based royalties3 minute readSales-based royalties under IFRS 15: the royalty exception, estimating unreported royalties, tiered rates, minimum royalties and selling royalty streams.
- Rebates, chargebacks and returns3 minute readPharma rebates and chargebacks under IFRS 15: gross-to-net revenue, payments to parties down the chain, wholesaler fees, returns and estimating each deduction.
- Acquired in-process R&D3 minute readAcquired in-process R&D under IFRS and US GAAP: asset acquisitions, the concentration test, contingent milestones, business combinations and annual impairment.
- Collaboration agreements3 minute readPharma collaboration agreements under IFRS: when the partner is a customer, cost-sharing reimbursements, profit sharing, joint operations and ASC 808.
- Pre-launch inventory3 minute readPre-launch inventory in pharma: when product made before approval is capitalised under IAS 2, write-downs if approval fails, shelf life, zero-cost stock.
- Impairment after trial failures3 minute readImpairment after a clinical trial failure: testing in-process R&D under IAS 36, contingent consideration gains, deferred tax, onerous contracts and reversals.
- Contract research organisation revenue3 minute readContract research organisation revenue under IFRS 15: services over time, measuring progress, pass-through costs as principal or agent, and change orders.
- Government funding for drug development3 minute readGovernment funding for drug development under IFRS: R&D grants under IAS 20, advance purchase agreements under IFRS 15, forgivable and below-market loans.
- Product liability provisions3 minute readProduct liability provisions under IAS 37: when claims over drugs or devices are provided for, expected values for mass claims, insurance, and disclosure.
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About these guides
Each guide starts from an accounting issue pharma companies actually face and works through it with numbers from the industry. 12 of 12 planned guides are published; more are added with every batch.