Pharma Pipeline

An automated sequence of data processing steps that extracts, transforms, and loads data from source systems into target systems for analysis, reporting, or machine learning model training. Well-architected data pipelines are critical infrastructure assets that enable data-driven decision-making and AI deployment, and their reliability directly impacts downstream business processes.

The sequential stages of human testing required before a new drug or medical device can receive regulatory approval. Phase I assesses safety in a small group, Phase II evaluates efficacy and dosing, Phase III confirms effectiveness in large populations, and Phase IV involves post-market surveillance.

The regulatory process by which a pharmaceutical product receives authorisation for commercial sale, granted by agencies such as the FDA (US), EMA (EU), and MHRA (UK). Drug approval requires demonstration of safety, efficacy, and manufacturing quality through preclinical studies and clinical trials.

A pharmaceutical product that contains the same active ingredient, dosage form, strength, and route of administration as an originator (branded) drug and is demonstrated to be bioequivalent. Generic drugs can be manufactured and marketed after the expiry of the originator's patent protection and regulatory exclusivity periods.

A regulatory status granted to drugs developed to treat rare diseases affecting small patient populations, providing incentives such as market exclusivity (7 years in the US, 10 years in the EU), tax credits on clinical trial costs, and reduced regulatory fees. Orphan drug designation significantly enhances the economic value of a pharma intangible asset by creating protected market positions.

The accounting practice of recording an intangible expenditure as an asset on the balance sheet rather than expensing it immediately through the income statement. Under IAS 38, development costs must be capitalised once the six criteria in IAS 38.57 are met, whereas research costs must always be expensed.

A pharmaceutical product that generates annual revenue exceeding $1 billion, representing a transformational commercial success for its manufacturer. Blockbuster drugs — such as statins, biologics for autoimmune diseases, and oncology treatments — drive the majority of pharmaceutical industry profits and are among the most valuable intangible assets in existence.

The sharp decline in revenue experienced by a pharmaceutical or technology company when patent protection expires on a key product, exposing it to generic or competitive alternatives. Patent cliffs are a critical consideration in the valuation of patent-dependent businesses, as revenue can decline 70-90% within 12-24 months of patent expiry in the pharmaceutical sector.

AI and IAS 38: When Can You Capitalise AI Development Costs?

IAS 38 sets six criteria for capitalising development costs, but applying them to AI projects is fraught with ambiguity. This article maps each criterion to AI development realities and provides practical guidance for CFOs and accountants navigating the recognition question.

How should companies capitalise AI investments under IAS 38?

Under IAS 38, AI development costs can be capitalised once technical feasibility, intent to complete, probable future benefits, and reliable cost measurement are demonstrated — research phase costs must be expensed.

What are the ASC 350 rules for software capitalisation?

ASC 350-40 requires capitalisation of internal-use software development costs during the application development stage, while preliminary project and post-implementation costs must be expensed.