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What does an R&D Company do?

Daniel Liden
Updated May 16, 2024
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An R&D company is a company that makes its money through the research and development of new ideas and products in any field. Such companies aim to both increase the overall body of human knowledge and to develop methods of using and capitalizing on such knowledge. Many companies engage in research and development work, as new and improved products and ideas are essential in business. An R&D company will, for this reason, usually pour a great many resources into the production of new products, allowing the company to compete with the many other companies that are almost certainly doing the same thing. Research and development work is unique in business because it puts immediate profits aside and focuses in improving the company and insuring future profits.

While a company is seldom strictly an R&D company, many companies have R&D departments that work to improve existing products and come up with new products and ideas. Not only businesses are involved in R&D work, though; universities and governments devote large amounts of money and manpower to the pursuit and application of knowledge. They do this for several different reasons, from searching for cures to diseases and disorders to developing new, more effective weapon systems.

Many believe that it is risky to invest in an R&D company because of the amount of money that is spent on trying to form new products and ideas compared to the amount that is earned on existing products. Sometimes, R&D companies simply don't succeed in making any kind of breakthrough that leads to a truly profitable idea. On the other hand, research and development work has led to some major advancements that have made companies and investors quite wealthy. Without those willing to risk their money on the ideas and plans of R&D companies, many of the technological breakthroughs people enjoy on a daily basis would likely be nonexistent.

One of the biggest industries that utilizes research and development work is the pharmaceutical industry. Any pharmaceutical R&D company is likely to be constantly seeking new ways to treat any of the millions of ailments that people suffer from on a daily basis. Some companies work to find better ways to deal with the common cold, while others search for the cures to many different types of cancer. New breakthroughs can lead to new drugs, and new drugs lead to more money for the company, especially when they are for use against common ailments.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Daniel Liden
By Daniel Liden
Daniel Liden, a talented writer with a passion for cutting-edge topics and data analysis, brings a unique perspective to his work. With a diverse academic background, he crafts compelling content on complex subjects, showcasing his ability to effectively communicate intricate ideas. He is skilled at understanding and connecting with target audiences, making him a valuable contributor.
Discussion Comments
By titans62 — On Sep 05, 2011

@JimmyT - Unfortunately, I'm not quite skilled enough to work in the design realm of a business, but I did work in the marketing department of a company. We had an extremely close connection with the R&D department.

Because we all know our own fields, the marketers have to tell the designers what we want. Then they say how close they can get and what it will take to make it happen. At the same time you have other departments like finance trying to figure out how it can be done the cheapest. A business that doesn't involve all of its departments in creating new products will find itself in a lot of trouble and confusion.

By stl156 — On Sep 05, 2011

@JimmyT - Really, what happen in an R&D department is all controlled by what industry the company is in.

For example, if you were working in pharmaceutical development, you would probably have a degree in something like chemistry or molecular biology. More likely is you would have a couple people from different disciplines combining their skills.

Something like a computer company would have a need for engineers that could code the software as well as the design the units.

By JimmyT — On Sep 04, 2011

I am interested in how someone could get a job in a research department? Clearly, there aren't degrees in R&D, but what kinds of degrees do the employees usually have?

Are there different ranks of an R&D department? What types of different jobs might you find yourself doing, and how could you move up?

Finally, how much interaction is there between an R&D department and the rest of the company? I would assume quite a bit.

By kentuckycat — On Sep 03, 2011

Besides pharmaceuticals or technology companies, we are consumers of research and development every time we eat or go to the store.

Just think of all the different flavors of cola or candy that come out every year. The same would go for the new sandwich types that restaurants develop.

The article says that investing in a company that has to do a lot of research and development might be risky. I think this is true for young companies, because you never know if consumers will like what they are selling.

For established companies, I think looking at the R&D department is one of the more important parts of investing. A company that never comes out with anything new will get stale and people will stop buying the products in favor of a competing company with more exciting products.

Daniel Liden
Daniel Liden
Daniel Liden, a talented writer with a passion for cutting-edge topics and data analysis, brings a unique perspective to...
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