Scale, Scope and Spillovers: The Determinants of Research Productivity in Drug Discovery
AbstractWe examine the relationship between firm size and research productivity in the pharmaceutical industry. Using detailed internal firm data, we find that larger research efforts are more productive, not only because they enjoy economies of scale, but also because they realize economies of scope by sustaining diverse portfolios of research projects that capture internal and external knowledge spillovers. In pharmaceuticals, economies of scope in research are important in shaping the boundaries of the firm, and it may be worth tolerating the static efficiency loss attributable to the market power of large firms in exchange for their superior innovative performance.
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Bibliographic InfoPaper provided by Department of Economics, University of Lancaster in its series Working Papers with number ec25/94.
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Postal: Department of Economics The Management School Lancaster University Lancaster LA1 4YX UK
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Web page: http://www.lums.lancs.ac.uk/econ/wkpap.htm
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- Rebecca Henderson & Iain Cockburn, 1996. "Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 32-59, Spring.
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