R&D and financial systems: the determinants of R&Dexpenditures in the Swedish pharmaceutical industry
This study investigates the determinants of R&D expenditures in the Swedish pharmaceutical industry from the 1960s to the mid 1990s. Various proxies for the rate of return of R&D (e.g. expected profit, sales and R&D productivity) as well as the availability of internal funding (proxied by past cash flows) have been used as explanatory variables in time series regressions. Past cash flow comes out as significant in regressions both at industry level and at firm level (made for each of the two largest companies). Another factor that is significant in most cases is expected sales. However, productivity of the R&D process does not seem to influence R&D expenditures. A comparison of these conclusions with studies of the pharmaceutical industries in countries with different financial systems; the US (with a market based financial system) and Japan (with a more bank based financial system) shows that Sweden (also leaning towards a bank based financial system) has the insensitivity to R&D productivity in common with Japan. This may be interpreted as these industries’ are taking a ‘longer term view’ on their research than the US’. The sensitivity to cash flow, however, is possibly more pronounced in Sweden than in Japan and suggests an important role of internal financing of R&D.
|Date of creation:||01 Jun 2008|
|Contact details of provider:|| Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden|
Phone: +46 (0) 46 222 74 68
Web page: http://www.circle.lu.se/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:hhs:lucirc:2008_001. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Torben Schubert)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.