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Japan's Shift From Process to Product Patents in the Pharmaceutical Industry: An Event Study of the Impact on Japanese Firms

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  • Sumner J. La Croix

    () (Department of Economics, University of Hawaii at Manoa)

  • Akihiko Kawaura

Abstract

In 1975, Japan expanded the scope of its patent law by introducing product patents for newly developed chemical and pharmaceutical products. The authors use rate-of-return data from the Tokyo Stock Exchange for Japanese pharmaceutical companies to examine the impact of the change in the patent law. Their empirical findings indicate that the passage of the new patent law induced an excess return of approximately 26 percent to a portfolio of large pharmaceutical companies. Companies with R&D programs specializing in new product development experienced large gains, while companies with R&D programs specializing in imitative process patents experienced no gains. Copyright 1995 by Oxford University Press.
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Suggested Citation

  • Sumner J. La Croix & Akihiko Kawaura, 1991. "Japan's Shift From Process to Product Patents in the Pharmaceutical Industry: An Event Study of the Impact on Japanese Firms," Working Papers 199118, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:199118
    Note: To request a hard copy of this paper, please email the department at econ@hawaii.edu.
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    1. Fama, Eugene F, et al, 1969. "The Adjustment of Stock Prices to New Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(1), pages 1-21, February.
    2. Chalk, Andrew, 1986. "Market Forces and Aircraft Safety: The Case of the DC-10," Economic Inquiry, Western Economic Association International, vol. 24(1), pages 43-60, January.
    3. Keim, Donald B., 1983. "Size-related anomalies and stock return seasonality : Further empirical evidence," Journal of Financial Economics, Elsevier, vol. 12(1), pages 13-32, June.
    4. Gultekin, Mustafa N. & Gultekin, N. Bulent, 1983. "Stock market seasonality : International Evidence," Journal of Financial Economics, Elsevier, vol. 12(4), pages 469-481, December.
    5. Kato, Kiyoshi & Schallheim, James S., 1985. "Seasonal and Size Anomalies in the Japanese Stock Market," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 20(02), pages 243-260, June.
    6. Jarrell, Gregg A & Poulsen, Annette B, 1989. "Stock Trading before the Announcement of Tender Offers: Insider Trading or Market Anticipation?," Journal of Law, Economics, and Organization, Oxford University Press, vol. 5(2), pages 225-248, Fall.
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    Cited by:

    1. Ming Liu & Sumner la Croix, 2013. "A Cross-Country Index of Intellectual Property Rights in Pharmaceutical Innovations," Working Papers 201313, University of Hawaii at Manoa, Department of Economics.
    2. Sumner J. La Croix & Denise Eby Konan, 2002. "Intellectual Property Rights in China: The Changing Political Economy of Chinese-American Interests," The World Economy, Wiley Blackwell, vol. 25(6), pages 759-788, June.
    3. repec:eee:wdevel:v:99:y:2017:i:c:p:15-27 is not listed on IDEAS
    4. Gamba, Simona, 2017. "The Effect of Intellectual Property Rights on Domestic Innovation in the Pharmaceutical Sector," World Development, Elsevier, vol. 99(C), pages 15-27.
    5. Ming Liu & Sumner LaCroix, 2011. "The Impact of Stronger Property Rights in Pharmaceuticals on Innovation in Developed and Developing Countries," Working Papers 201116, University of Hawaii at Manoa, Department of Economics.
    6. Jörg Mahlich, 2010. "Patents and performance in the Japanese pharmaceutical industry: An institution-based view," Asia Pacific Journal of Management, Springer, vol. 27(1), pages 99-113, March.
    7. Sumner La Croix, 1994. "Korea's Shift from Process to Product Patents in the Pharmaceutical Industry: An Event Study of the Impact of American Pressure on Korean Film," Working Papers 199402, University of Hawaii at Manoa, Department of Economics.
    8. Nahoko Mitsuyama, 2013. "Stock Market Reaction to Patent Value in Japan: an Event Study Analysis," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(6), pages 1-12, December.

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