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International Strategic Alliances for Local Market Entry: Direct Launches versus Marketing Alliances in Pharmaceuticals

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Author Info
TAKECHI Kazutaka
Abstract

This paper investigates the determinants of international strategic alliances by pharmaceutical firms. When launching drugs onto the market, there are two choices: launching the drugs directly or forming marketing alliances including licensing agreements. Because these choices affect firm revenue structure and the international supply pattern of pharmaceuticals, the impact on world welfare is significant. We examine the determinants of supply mode choice (direct launch versus alliance) by Japanese pharmaceutical companies. Our estimation results reveal that in addition to firm heterogeneity, product - and market - specific determinants of strategic alliances are important: firms with smaller scope economies prefer alliances for drugs with less market potential when intellectual property rights protection (IPP) is strong.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 08022.

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Length: 25 pages
Date of creation: Jul 2008
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Handle: RePEc:eti:dpaper:08022

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  2. Smith, Pamela J., 2001. "How do foreign patent rights affect U.S. exports, affiliate sales, and licenses?," Journal of International Economics, Elsevier, vol. 55(2), pages 411-439, December. [Downloadable!] (restricted)
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  19. Martin Richardson, 2004. "Trade Policy and Access to Retail Distribution," Review of International Economics, Blackwell Publishing, vol. 12(4), pages 676-688, 09. [Downloadable!] (restricted)
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  20. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June. [Downloadable!]
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