Expenditures on research and development (R&D) and sales promotion are essential elements for enhancing a firm's business performance and value. The former represents a long-term value driver, while the latter contributes to value creation over the medium to short term. This study empirically examines the differential investment effects of R&D and sales promotion expenditures among Korean pharmaceutical companies by separating them into earnings effects and stock price effects. In terms of research methodology, both time-series analysis at the individual firm level and cross-sectional analysis of the entire sample are employed in parallel to test the lagged effects of R&D and sales promotion expenditures. Here, sales promotion expenditure serves as a measure intended to comprehensively capture the rebate-related spending of Korean pharmaceutical companies. Since it is practically impossible to directly measure covert rebate expenses, major items from the comprehensive income statement accounts that are deemed relevant to sales promotion activities possessing the characteristics of rebates are combined in a proxy manner for use in the analysis. Additionally, through supplementary analysis, the electronic components industry—classified as a high-technology sector alongside the pharmaceutical industry—was selected as a control group, and comparative analysis between the two industries was conducted to reconfirm the differential effects of R&D and sales promotion expenditures on business performance and firm value. Listed pharmaceutical companies on the securities market during the research period from 1990 to 2010 were selected as the sample, and the key findings are summarized as follows. First, cross-sectional analysis of the entire sample revealed that current and past R&D expenditures in the Korean pharmaceutical industry had no significant effect on current operating income or firm value, whereas sales promotion expenditures showed a statistically significant positive correlation with current operating income and firm value. Second, the above cross-sectional analysis results were equally supported by time-series analysis at the individual firm level. This indicates that Korean pharmaceutical companies manage their business performance and firm value by focusing on promotional activities centered on generic drugs rather than dedicating themselves to R&D activities. Third, comparative analysis of the value relevance of sales promotion and R&D expenditures in the electronic components manufacturing industry against the pharmaceutical industry revealed diametrically opposite results between the two industries, with sales promotion expenditures having value relevance only in the pharmaceutical industry. This is interpreted as a result reflecting the distinctive business environment of the Korean pharmaceutical industry—namely, the lack of momentum in new drug development and the intense competition surrounding the domestic market. The findings of this study provide empirical evidence supporting the widespread perception that the business performance and firm value of Korean pharmaceutical companies depend not on long-term R&D investment but on sales promotion activities aimed at short-term maintenance of the status quo. These findings are expected to offer useful clues for policy authorities seeking directions to improve the distribution culture of the Korean pharmaceutical industry, reform business practices focused on the production and sale of generic drugs, and enable the industry to make a genuine leap forward as a high-technology sector. Furthermore, the results of this study suggest that the manner in which various intangible asset expenditures, including R&D and sales promotion expenses, contribute to a firm's business performance may manifest differently depending on industry-specific characteristics or the environmental conditions facing individual firms.