Fairness, Disclosures and Future Trends in Accounting for Pharmaceutical Companies

Abstract

The implementation of Good Corporate Governance plays a major role in determining the future of a healthy and high-value company. This study aims to determine the fairness, disclosure, and future trends in accounting for pharmaceutical companies. This study takes a qualitative descriptive approach and use secondary data. There are several factors that must be considered by pharmaceutical organizations in assessing fairness, such as Research and Development (R&D) costs in financial statements must be distributed properly, costs of manufacture and distribution of overhead cost, such as costs that affect the production of drugs indirectly are very important to develop accurate financial statement. These three factors are closely related to the "price" of the drug. The costs of production could be considered as confidential information and are not made public. However, fairness plays an important role in the preparation of financial statements. If the demand for a particular drug is high, the achievement of affordability will be considered reasonable if the price of the product is cheap, and vice versa. On the other hand, “price” is highly dependent on Cost of Goods Produced (COGM). Participants of the WHO forum stated the importance of disclosure as a unifying principle in solving problems of price, access to innovation, and others. This situation can be analyzed through the disclosure of a company's Financial Statements. Investors are able to analyze the growth of an industry through financial reports for investment or funding purposes. This situation correlates with the research and development (R&D) sector which requires funds to develop drugs. The advent of AIS helps companies to track organizational and financial reports in real time. Therefore, to support future trends in terms of health and drug technology innovation, the principles of fairness and disclosure should be adhered to by public sector managers through legislative measures, and attach disclosure requirements to R&D funding and investment.