Fabio Pammolli (IMT, Lucca Institute for Advanced Studies) Massimo Riccaboni (University of Florence) Laura Magazzini (University of Verona, Department of Economics)
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The research effort undertaken by firms is driven by a multiple set of factors and incentives. The debate in the theoretical literature has focused the attention on “technology push” versus “demand pull” theories, the former considering the exogenous effect of science on technological change, while the latter regarding market growth and size as unique determinants of the decision to invest in R&D. Both theories tell only part of the story. The decision to invest in R&D, and therefore the rate and direction of technological progress, is the result of the interplay between the advances spanning from basic science, institutional variables, and economic factors, namely market growth and size. In this paper we investigate the pharmaceutical industry, where R&D has clear implications for the welfare and health of the population, and both patient needs and technological progress play a fundamental role in the innovation process. We ask what drives pharmaceutical R&D investments in specific therapeutic submarkets. To address this question it is essential to map the research effort of firms (both established pharmaceutical firms and new biotechnology firms) and public research organizations in terms of the epidemiological characteristics and the severity of the disease targeted by their R&D projects. Moreover, we take into consideration the nationality of the main corporations performing R&D in the pharmaceutical industry, with clear implications for the recent debate viewing Europe as a “free rider” on US innovations.
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Paper provided by Economics, Markets, Institutions - IMT Institutions, Markets, Technologies - Institute for Advanced Studies Lucca in its series Working Papers with number
2.
Find related papers by JEL classification: O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
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