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Pharmaceutical Research Strategies

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  • Sandra Phlippen

    ()
    (Erasmus University Rotterdam)

  • An Vermeersch

    (McKinsey and Company)

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    Abstract

    This study analyses 1400 research projects of the top 20 R&D-spending pharmaceuticals to identify the determinants of successful research projects. We provide clear evidence that externally sourced projects and projects involving biotechnologies perform better than internal projects and chemical projects, respectively. Controlling for these effects, we find that big pharma should either build a critical mass of disease area knowledge or diversify projects over different DA’s in order to obtain higher success probabilities. Projects in which a firm has built a critical mass of disease knowledge (through at least 10 projects per DA) are significantly more likely to reach clinical testing. Moreover, within large disease areas, the success probabilities of internal projects increases when a few (less than 20%) externally sourced projects are involved. We interpret this finding as knowledge spillovers from external to internal projects, as the limited number of external projects enables the same people to be involved in both external and internal research projects and apply externally generated knowledge internally.

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    Bibliographic Info

    Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 08-022/3.

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    Date of creation: 03 Mar 2008
    Date of revision: 08 May 2008
    Handle: RePEc:dgr:uvatin:20080022

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    Web page: http://www.tinbergen.nl

    Related research

    Keywords: research strategies; pharmaceutical industry; innovation; external collaborations; make-or-buy;

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    1. Arora, Ashish & Gambardella, Alfonso, 1994. "Evaluating technological information and utilizing it : Scientific knowledge, technological capability, and external linkages in biotechnology," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 24(1), pages 91-114, June.
    2. Veugelers, Reinhilde, 1997. "Internal R & D expenditures and external technology sourcing," Research Policy, Elsevier, Elsevier, vol. 26(3), pages 303-315, October.
    3. Laura Abramovsky & Rupert Harrison & Helen Simpson, 2007. "University research and the location of business R&D," IFS Working Papers, Institute for Fiscal Studies W07/02, Institute for Fiscal Studies.
    4. Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 38(4), pages 361-79, June.
    5. 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.
    6. Freeman, C., 1991. "Networks of innovators: A synthesis of research issues," Research Policy, Elsevier, Elsevier, vol. 20(5), pages 499-514, October.
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