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The Value of Failures in Pharmaceutical R&D

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Author Info

  • Jing-Yuan Chio

    (IMT Lucca Institute for Advanced Studies)

  • Laura Magazzini

    (Department of Economics, University of Verona)

  • Fabio Pammolli

    ()
    (IMT Lucca Institute for Advanced Studies and CERM Foundation)

  • Massimo Riccaboni

    ()
    (IMT Lucca Institute for Advanced Studies and Department of Managerial Economics, Strategy and Innovation, K.U. Leuven)

Abstract

We build a cumulative innovation model in which both success and failure provide valuable information for future research. To test this learning mechanism, we use a dataset covering outcomes of world-wide R&D projects in the pharmaceutical industry, and proxy knowledge flows with forward citations received by patents associated with each project. Empirical results confirm theoretical predictions that patents associated with successfully completed projects (i.e., leading to drug launch on the market) receive more citations than those associated to failed (terminated) projects, which in turn are cited more often than patents lacking clinical or preclinical information. We therefore offer evidence of the value of failures as research inputs in (pharmaceutical) innovation

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File URL: http://eprints.imtlucca.it/1202/1/EIC_WP_1_2012.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by IMT Institute for Advanced Studies Lucca in its series Working Papers with number 1/2012.

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Length: 27 pages
Date of creation: Jan 2012
Date of revision: Jan 2012
Handle: RePEc:ial:wpaper:1/2012

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Related research

Keywords: R&D competition; patent policy; pharmaceutical industry;

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References

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  2. Laura Magazzini & Fabio Pammolli & Massimo Riccaboni & Maria Alessandra Rossi, 2009. "Patent Disclosure and R&D Competition in Pharmaceuticals," DISA Working Papers 0902, Department of Computer and Management Sciences, University of Trento, Italy, revised 11 Jun 2009.
  3. Fabio Pammolli & Massimo Riccaboni & Laura Magazzini, 2010. "The productivity crisis in pharmaceutical R&D," Working Papers 06/2010, University of Verona, Department of Economics.
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