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The Impact of Patenting on New Product Introductions in the Pharmaceutical Industry

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  • Stuart, Graham
  • Higgins, Matthew

Abstract

Since Comanor and Scherer (1969), researchers have been using patents as a proxy for new product development. In this paper, we reevaluate this relationship by using novel new data. We demonstrate that the relationship between patenting and new FDA-approved product introductions has diminished considerably since the 1950s, and in fact no longer holds. Moreover, we also find that the relationship between R&D expenditures and new product introductions is considerably smaller than previously reported. While measures of patenting remain important in predicting the arrival of product introductions, the most important predictor is the loss of exclusivity protection on a current product. Our evidence suggests that pharmaceutical firms are acting strategically with respect to new product introductions. Finally, we find no relationship between firm size and new product introductions.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4574.

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Date of creation: 08 Aug 2007
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Handle: RePEc:pra:mprapa:4574

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Keywords: Patenting; Pharmaceutical industry; New product management; Research productivity;

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References

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  2. Comanor, William S & Scherer, Frederic M, 1969. "Patent Statistics as a Measure of Technical Change," Journal of Political Economy, University of Chicago Press, vol. 77(3), pages 392-98, May/June.
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  7. Nicholas Bloom & John Van Reenen, 2002. "Patents, Real Options and Firm Performance," Economic Journal, Royal Economic Society, vol. 112(478), pages C97-C116, March.
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  17. Kortum, Samuel & Lerner, Josh, 1998. "Stronger protection or technological revolution: what is behind the recent surge in patenting?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 247-304, June.
  18. Cockburn, Iain & Griliches, Zvi, 1988. "Industry Effects and Appropriability Measures in the Stock Market's Valuation of R&D and Patents," American Economic Review, American Economic Association, vol. 78(2), pages 419-23, May.
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Citations

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Cited by:
  1. Matthew J. Higgins & Paula E. Stephan & Jerry G. Thursby, 2008. "Conveying Quality and Value in Emerging Industries: Star Scientists and the Role of Learning in Biotechnology," NBER Working Papers 14602, National Bureau of Economic Research, Inc.
  2. Hansen, Zeynep & Higgins, Matthew, 2007. "The Effect of Contractual Complexity on Technology Sourcing Agreements," MPRA Paper 4979, University Library of Munich, Germany.
  3. repec:hal:journl:halshs-00331211 is not listed on IDEAS
  4. Nelson, Andrew J., 2009. "Measuring knowledge spillovers: What patents, licenses and publications reveal about innovation diffusion," Research Policy, Elsevier, vol. 38(6), pages 994-1005, July.

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