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The determinants of pharmaceutical research and development expenditures

Author

Listed:
  • Henry Grabowski

    () (Department of Economics, Duke University, Durham, NC 27708, USA)

  • John Vernon

    () (Department of Economics, Duke University, Durham, NC 27708, USA)

Abstract

Since the late 1970s, pharmaceutical R&D has grown at a rapid rate relative to sales and other variables. In this paper, we examine the determinants of pharmaceutical R&D using a pooled data sample of 11 major drug firms over the period 1974 to 1994. We find that expected returns and cash flows are important explanatory variables of firm research intensities during this period. This is consistent with our results for an earlier sample period characterized by very different growth patterns on R&D.

Suggested Citation

  • Henry Grabowski & John Vernon, 2000. "The determinants of pharmaceutical research and development expenditures," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 201-215.
  • Handle: RePEc:spr:joevec:v:10:y:2000:i:1:p:201-215
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    Keywords

    Pharmaceuticals - R&D - Innovation - Cash flow - Expected returns;

    JEL classification:

    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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