Advanced Search
MyIDEAS: Login to save this paper or follow this series

Determinants of Pharmaceutical Innovation: The Role of Technological Opportunities Revisited

Contents:

Author Info

  • Bastian Rake

Abstract

Recent empirical contributions emphasize the importance of (potential) market size for the development of new pharmaceuticals. At the same time many scholars point out the importance of of scientific advances for the industry’s R&D activities. Against this background I analyze the relationship between (potential) market size, technological opportunities, and the number of new pharmaceuticals in the United States. Technological opportunities are operationalized as growth rates of the relevant knowledge stock as proposed by Andersen (1999, 1998). I analyze a unique dataset by using an “entry stock” Poisson quasi-maximum likelihood estimator. The results reveal a rather robust and significantly positive response of the number of new pharmaceuticals, i.e., new molecular entities or new drug approvals, to market size and technological opportunities.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www3.druid.dk/wp/20130003.pdf
Download Restriction: no

Bibliographic Info

Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 13-03.

as in new window
Length:
Date of creation: 2013
Date of revision:
Handle: RePEc:aal:abbswp:13-03

Contact details of provider:
Web page: http://www.druid.dk/

Related research

Keywords: Determinants of Innovation; Pharmaceuticals; Demand; Technological Opportunities;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Jörg Mahlich & Thomas Roediger-Schluga, 2006. "The Determinants of Pharmaceutical R&D Expenditures: Evidence from Japan," Review of Industrial Organization, Springer, Springer, vol. 28(2), pages 145-164, 03.
  2. Scherer, F M, 1982. "Demand-Pull and Technological Invention: Schmookler Revisited," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 30(3), pages 225-37, March.
  3. Cockburn, Iain M. & Henderson, Rebecca M., 2001. "Scale and scope in drug development: unpacking the advantages of size in pharmaceutical research," Journal of Health Economics, Elsevier, Elsevier, vol. 20(6), pages 1033-1057, November.
  4. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, Elsevier, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
  5. Freeman, Chris, 1994. "The Economics of Technical Change," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 18(5), pages 463-514, October.
  6. Richard Blundell & Rachel Griffith & Frank Windmeijer, 1999. "Individual effects and dynamics in count data models," IFS Working Papers, Institute for Fiscal Studies W99/03, Institute for Fiscal Studies.
  7. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(3), pages 1049-1090, August.
  8. Giaccotto, Carmelo & Santerre, Rexford E & Vernon, John A, 2005. "Drug Prices and Research and Development Investment Behavior in the Pharmaceutical Industry," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 48(1), pages 195-214, April.
  9. Henry Grabowski & John Vernon, 2000. "The determinants of pharmaceutical research and development expenditures," Journal of Evolutionary Economics, Springer, Springer, vol. 10(1), pages 201-215.
  10. Henry G. Grabowski, 1968. "The Determinants of Industrial Research and Development: A Study of the Chemical, Drug, and Petroleum Industries," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 76, pages 292.
  11. Blundell, Richard & Griffith, Rachel & Van Reenen, John, 1995. "Dynamic Count Data Models of Technological Innovation," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 105(429), pages 333-44, March.
  12. Franco Malerba & Richard Nelson & Luigi Orsenigo & Sidney Winter, 2007. "Demand, innovation, and the dynamics of market structure: The role of experimental users and diverse preferences," Journal of Evolutionary Economics, Springer, Springer, vol. 17(4), pages 371-399, August.
  13. Birgitte Andersen, 1999. "The hunt for S-shaped growth paths in technological innovation: a patent study," Journal of Evolutionary Economics, Springer, Springer, vol. 9(4), pages 487-526.
  14. Wolfgang Becker & Juergen Peters, 2000. "Technological Opportunities, Absorptive Capacities, and Innovation," Discussion Paper Series, Universitaet Augsburg, Institute for Economics 195, Universitaet Augsburg, Institute for Economics.
  15. Rodrigo Cerda, 2007. "Endogenous innovations in the pharmaceutical industry," Journal of Evolutionary Economics, Springer, Springer, vol. 17(4), pages 473-515, August.
  16. Michael Kremer, 2002. "Pharmaceuticals and the Developing World," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(4), pages 67-90, Fall.
  17. Jürgen Bitzer & Andreas Stephan, 2002. "A Schumpeter-Inspired Approach to the Construction of R&D Capital Stocks," Discussion Papers of DIW Berlin 300, DIW Berlin, German Institute for Economic Research.
  18. Castellacci, Fulvio, 2007. "Technological regimes and sectoral differences in productivity growth," MPRA Paper 27598, University Library of Munich, Germany.
  19. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 569-96, September.
  20. David Reiffen & Michael R. Ward, 2005. "Generic Drug Industry Dynamics," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 37-49, February.
  21. Lichtenberg, Frank R., 2004. "Sources of U.S. longevity increase, 1960-2001," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 44(3), pages 369-389, July.
  22. Geroski, P A & Walters, C F, 1995. "Innovative Activity over the Business Cycle," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 105(431), pages 916-28, July.
  23. Henderson, Rebecca. & Cockburn, Iain., 1994. "Measuring competence? : exploring firm effects in pharmaceutical research," Working papers, Massachusetts Institute of Technology (MIT), Sloan School of Management 3712-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  24. Toole, Andrew A., 2012. "The impact of public basic research on industrial innovation: Evidence from the pharmaceutical industry," Research Policy, Elsevier, Elsevier, vol. 41(1), pages 1-12.
  25. Yin, Wesley, 2008. "Market incentives and pharmaceutical innovation," Journal of Health Economics, Elsevier, Elsevier, vol. 27(4), pages 1060-1077, July.
  26. Lim, Kwanghui, 2004. "The relationship between research and innovation in the semiconductor and pharmaceutical industries (1981-1997)," Research Policy, Elsevier, Elsevier, vol. 33(2), pages 287-321, March.
  27. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Applications to Poisson Models," Econometrica, Econometric Society, Econometric Society, vol. 52(3), pages 701-20, May.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:aal:abbswp:13-03. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keld Laursen).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.