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Impact of Research and Development Strategy on Sustainable Growth in Multinational Pharmaceutical Companies

Author

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  • Fumio Teramae

    (Graduate School of Technology Management, Ritsumeikan University, Osaka 567-8570, Japan
    Eli Lilly Japan K.K., Hyogo 651-0086, Japan)

  • Tomohiro Makino

    (Graduate School of Technology Management, Ritsumeikan University, Osaka 567-8570, Japan)

  • Yeongjoo Lim

    (Faculty of Business Administration, Ritsumeikan University, Osaka 567-8570, Japan)

  • Shintaro Sengoku

    (School of Environment and Society, Tokyo Institute of Technology, Tokyo 152-8550, Japan)

  • Kota Kodama

    (Graduate School of Technology Management, Ritsumeikan University, Osaka 567-8570, Japan
    Center for Research and Education on Drug Discovery, The Graduate School of Pharmaceutical Sciences in Hokkaido University, Hokkaido 060-0808, Japan)

Abstract

Research and development (R&D) productivity is continuously declining, and it is said that the conventional model of pharmaceutical business is becoming obsolete. Many research studies on R&D productivity focus on inputs (e.g., strategic transactions to absorb external innovation, R&D expenditures), outputs (e.g., approvals of a new drug), and outcomes (e.g., total sales, incomes). However, few prior studies address the relationship among these three components simultaneously. Therefore, we comprehensively analyzed factors affecting R&D productivity by statistically examining a sample of 30 large multinational companies. Our results show that strategic transactions do not increase the number of approved drugs and negatively affect growth in terms of total sales. Additionally, our results show that a home-region-oriented international strategy positively affects total sales, thus indicating that responsiveness to local medical needs is important for sustainable growth. This paper contributes to the body of research on R&D productivity in the pharmaceutical industry.

Suggested Citation

  • Fumio Teramae & Tomohiro Makino & Yeongjoo Lim & Shintaro Sengoku & Kota Kodama, 2020. "Impact of Research and Development Strategy on Sustainable Growth in Multinational Pharmaceutical Companies," Sustainability, MDPI, vol. 12(13), pages 1-15, July.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:13:p:5358-:d:379480
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