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Public-Private Interaction and the Productivity of Pharmaceutical Research

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  • Iain Cockburn
  • Rebecca Henderson

Abstract

We examine the impact of publicly funded biomedical research on the in-house research of the for-profit pharmaceutical industry. Qualitative analysis of the history of the discovery and development of a sample of 21 significant drugs, and a program of interviews with senior managers and scientists reveals a complex and often bidirectional relationship between the public and private sectors of the industry, illustrating the difficulties inherent in estimating the rate of return to public support of basic research. This analysis also highlights the importance for private sector firms of maintaining close connections to the upstream' scientific community, which requires them to make significant investments in doing in-house basic research and adopting appropriate internal incentives and procedures. We measure the extent and nature of this connectedness' using data on coauthorship of scientific papers between pharmaceutical company scientists and publicly funded researchers. These measures are significantly correlated with firms' internal organization, as well as their research performance in drug discovery as measured by important patents per research dollar. The size of the estimated impact of connectedness' to private research productivity implies a substantial return to public investments in basic research.

Suggested Citation

  • Iain Cockburn & Rebecca Henderson, 1997. "Public-Private Interaction and the Productivity of Pharmaceutical Research," NBER Working Papers 6018, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6018
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    Cited by:

    1. David B. Audretsch & Dennis P. Leyden & Albert N. Link, 2013. "Universities as research partners in publicly supported entrepreneurial firms," Chapters,in: Public Support of Innovation in Entrepreneurial Firms, chapter 12, pages 175-192 Edward Elgar Publishing.
    2. Andrew Toole & Dirk Czarnitzki, 2007. "Biomedical Academic Entrepreneurship through the SBIR Program," NBER Chapters,in: Academic Science and Entrepreneurship: Dual Engines of Growth National Bureau of Economic Research, Inc.
    3. Hagedoorn, John & Link, Albert N. & Vonortas, Nicholas S., 2000. "Research partnerships1," Research Policy, Elsevier, vol. 29(4-5), pages 567-586, April.
    4. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
    5. Shahbaz Sheikh, 2012. "Do CEO compensation incentives affect firm innovation?," Review of Accounting and Finance, Emerald Group Publishing, vol. 11(1), pages 4-39, February.
    6. Maurice Cassier & Dominique Foray, 2001. "Économie de la connaissance : le rôle des consortiums de haute technologie dans la production d'un bien public," Économie et Prévision, Programme National Persée, vol. 150(4), pages 107-122.
    7. Jacob, Brian A. & Lefgren, Lars, 2011. "The impact of research grant funding on scientific productivity," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1168-1177, October.
    8. Voigt, Tim & Kuhl, Rainer, 2007. "Dynamic Capabilities in the Food Industry? - On the Applicability of the Evolutionary Orientated Resource Based View of Firm," 2007 1st Forum, February 15-17, 2007, Innsbruck, Austria 6614, International European Forum on System Dynamics and Innovation in Food Networks.
    9. Bronwyn H. Hall & Albert N. Link & John T. Scott, 2003. "Universities as Research Partners," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 485-491, May.

    More about this item

    JEL classification:

    • H8 - Public Economics - - Miscellaneous Issues
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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