The objective of this study is to evaluate the impact of bio-tech company research and development (R&D) expenses on operational performance in Taiwan via Cobb-Douglas production function including R&D density as a variable. The empirical results indicate that R&D expense reveals negative effect to the net revenue of bio-tech industry in Taiwan. However, the R&D expense shows positive relationship to the net revenue after taxation. According to the natures of basic data, the percentage of R&D expense to total cost was only 4% in Taiwan, which was relative small to that of advanced countries. If we consider the economies of scale effect, the R&D expense shows strong positive relationship to the net revenue, which implies that the bio-tech industry is still in the stage of investment period in Taiwan. If the scale of the industry is expanded, the R&D expenses would be benefit to the operational performance as advanced countries is.