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The Impact of R&D Cooperation on Drug Variety Offered on the Market: Evidence from the Pharmaceutical Industry

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  • Tannista Banerjee
  • Ralph Siebert

Abstract

This study shows that R&D cooperation can be used as an instrument to coordinate drug development portfolios among participating firms, which has crucial implications on the number of drugs offered on the market. Our study puts special attention to the fact that R&D cooperation, formed at different stages throughout the drug development process, have different impacts on the technology and product markets. Using a comprehensive dataset on the pharmaceutical industry, our results show that R&D cooperation formed at the early stages increase the number of R&D projects and the number of drugs launched on the product market. Late stage R&D cooperation, however, have a positive impact on the drug development process and drug variety only in the short run. In the long run, late stage cooperation provoke that firms re-optimize their drug development portfolios which reduces the number of drugs offered on the market.

Suggested Citation

  • Tannista Banerjee & Ralph Siebert, 2013. "The Impact of R&D Cooperation on Drug Variety Offered on the Market: Evidence from the Pharmaceutical Industry," Auburn Economics Working Paper Series auwp2013-20, Department of Economics, Auburn University.
  • Handle: RePEc:abn:wpaper:auwp2013-20
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    Cited by:

    1. Vicar S. Valencia, 2016. "The Impact of R&D Alliance on the Survival of Newly Listed High Tech Firms," Business and Economic Research, Macrothink Institute, vol. 6(2), pages 197-210, December.

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    More about this item

    Keywords

    Drug development; Dynamics; Co-development; Pharmaceutical industry; Product variety; Product market competition; Research and Development cooperation;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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