Covid Vaccine Rollout Puts R&D Accounting Under Fresh Scrutiny

The groundbreaking research behind one of the most anticipated scientific developments in years would seem like a slam-dunk boost to pharmaceutical companies’ 2020 earnings.

Think again.

Thanks to U.S. accounting rules developed more than four decades ago, the research and development underpinning coronavirus vaccines is counted as an expense that dings earnings, not an asset that enlarges it.

In periods of intense behind-the-scenes research, those expenses balloon, making sizable earnings dents in one period and potentially big gains in another if the work comes to fruition.

Accountants and investors have debated for decades whether this treatment of the behind-the-scenes investment ...