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The Vertical Chain of Research and Development in the Pharmaceutical Industry

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  • Ward, Michael R
  • Dranove, David

Abstract

This paper examines the relationship between basic and applied pharmaceutical research. The authors focus on three stages of R&D: government-funded basic research; publication in medical journals; and industry-funded applied R&D. They estimate that a one percent increase in basic research in a particular therapeutic category causes a 0.76 percent increase in industry R&D in that category, and a 1.71 percent increase in other categories, over seven years. The authors also find that research incentives differ across government, academic, and industry researchers. For example, government funding favors diseases that are less prevalent and more debilitating than industry funding. Copyright 1995 by Oxford University Press.

Suggested Citation

  • Ward, Michael R & Dranove, David, 1995. "The Vertical Chain of Research and Development in the Pharmaceutical Industry," Economic Inquiry, Western Economic Association International, vol. 33(1), pages 70-87, January.
  • Handle: RePEc:oup:ecinqu:v:33:y:1995:i:1:p:70-87
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    Cited by:

    1. Bhattacharya, Jay & Packalen, Mikko, 2011. "Opportunities and benefits as determinants of the direction of scientific research," Journal of Health Economics, Elsevier, vol. 30(4), pages 603-615, July.
    2. Gamal Atallah, 2002. "Vertical R&D Spillovers, Cooperation, Market Structure, and Innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(3), pages 179-209.
    3. Margaret K. Kyle & Anita M. McGahan, 2012. "Investments in Pharmaceuticals Before and After TRIPS," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 1157-1172, November.
    4. Toole, Andrew A., 2005. "Does Public Scientific Research Complement Industry R&D Investment? The Case of NIH Supported Basic and Clinical Research and Pharmaceutical Industry R&D," ZEW Discussion Papers 05-75, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Manuel I. Hermosilla & Jorge A. Lemus, 2017. "Therapeutic Translation of Genomic Science: Opportunities and limitations of GWAS," NBER Working Papers 23989, National Bureau of Economic Research, Inc.
    6. Scherer, F.M., 2010. "Pharmaceutical Innovation," Handbook of the Economics of Innovation, Elsevier.
    7. Office of Health Economics & RAND Europe, 2010. "Enhancing the Benefits from Biomedical and Health Research Spillovers," Occasional Papers 000217, Office of Health Economics.
    8. Sussex, J., 2010. "Innovation in Medicines: Can We Value Progress?," Seminar Briefings 000219, Office of Health Economics.
    9. Unterschultz, James R. & Lerohl, Mel L. & Peng, Yanning & Gurung, Rajendra Kumar, 1998. "A Nutraceutical Industry: Policy Implications for Future Directions," Project Report Series 24051, University of Alberta, Department of Resource Economics and Environmental Sociology.
    10. Anna Giunta & Filippo M. Pericoli & Eleonora Pierucci, 2016. "University–Industry collaboration in the biopharmaceuticals: the Italian case," The Journal of Technology Transfer, Springer, vol. 41(4), pages 818-840, August.
    11. Toole, Andrew A, 2007. "Does Public Scientific Research Complement Private Investment in Research and Development in the Pharmaceutical Industry?," Journal of Law and Economics, University of Chicago Press, vol. 50(1), pages 81-104, February.

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