@ananth and @nishantkandoi very valid points. spending money now for a future benefit is what investing is all about. However, there is also another angle to investment and that’s the margin of safety and intrinsic value. I am the kind of investor who would make a reasonable attempt to project the cash flows of a business and discount it at an appropriate rate to arrive at the intrinsic value and thus my margin of safety.
In case of pharma sector, more and more companies are (forced to) targeting complex generics and spending money on R&D to keep the business running. Simple generics were the low hanging fruit that is all taken. How do you project the future cashflows of these R&D expenses? There is a reason accounting standards required that all R&D spend must be expensed and not capitalized. May be my style of investing is not suitable for pharma sector. This is becoming more of a leap-of-faith rather than calculated-risk type of investments.
At what price point does pains today (have) become less troubling than gains tomorrow?