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The productivity crisis in pharmaceutical R&D

Author

Listed:
  • Fabio Pammolli

    () (IMT Lucca Institute for Advanced Studies)

  • Massimo Riccaboni

    () (University of Trento)

  • Laura Magazzini

    () (Department of Economics (University of Verona))

Abstract

We analyze the decline of R&D productivity in pharmaceuticals and its determinants. Since the molecular biology revolution, science has dramatically expanded the set of plausible therapeutic targets. However, innovation has become more difficult to achieve, and attrition rates of R&D projects have increased, especially in late-phase clinical trials. We show that the R&D productivity slowdown is associated with a higher concentration of R&D investments in high-risk domains, corresponding to unsolved therapeutic needs and unexploited biological mechanisms. We compare the strategies of European and US companies, finding differences in the composition of R&D portfolios, but no evidence of any productivity gap.

Suggested Citation

  • Fabio Pammolli & Massimo Riccaboni & Laura Magazzini, 2010. "The productivity crisis in pharmaceutical R&D," Working Papers 06/2010, University of Verona, Department of Economics.
  • Handle: RePEc:ver:wpaper:06/2010
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why so few drug innovations?
      by Economic Logician in Economic Logic on 2010-09-02 19:25:00

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    Cited by:

    1. Martin Backfisch, 2017. "Have Pharmaceutical R&D Project Success Rates Decreased? A Critical Review and New Empirical Results," MAGKS Papers on Economics 201746, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Tommaso Ciarli & Andre Lorentz & Marco Valente & Mario Savona, 2017. "Structural Changes and Growth Regimes," SPRU Working Paper Series 2017-12, SPRU - Science and Technology Policy Research, University of Sussex.
    3. Lorenz, Steffi, 2015. "Diversität und Verbundenheit der unternehmerischen Wissensbasis: Ein neuartiger Messansatz mit Indikatoren aus Innovationsprojekten," Discussion Papers on Strategy and Innovation 15-01, Philipps-University Marburg, Department of Technology and Innovation Management (TIM).
    4. repec:bla:jpbect:v:19:y:2017:i:1:p:121-141 is not listed on IDEAS
    5. repec:spr:scient:v:96:y:2013:i:3:d:10.1007_s11192-013-0968-x is not listed on IDEAS
    6. Jakub Growiec & Fabio Pammolli & Massimo Riccaboni, 2011. "Innovation and Corporate Dynamics: A Theoretical Framework," DISA Working Papers 2011/08, Department of Computer and Management Sciences, University of Trento, Italy, revised 29 Jul 2011.
    7. Billette de Villemeur, Etienne & Versaevel, Bruno, 2017. "One Lab, Two Firms, Many Possibilities: on R&D outsourcing in the biopharmaceutical industry," MPRA Paper 76903, University Library of Munich, Germany.
    8. Rosella Levaggi & Michele Moretto & Paolo Pertile, 2017. "The Dynamics of Pharmaceutical Regulation and R&D Investments," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(1), pages 121-141, February.
    9. Stephan Eger & Jörg Mahlich, 2014. "Pharmaceutical regulation in Europe and its impact on corporate R&D," Health Economics Review, Springer, vol. 4(1), pages 1-9, December.
    10. BELDERBOS, René & GILSING, Victor & SUZUKI, Shinya, 2015. "Direct And Mediated Ties To Universities: ‘Scientific’ Absorptive Capacity And Innovation Performance Of Pharmaceutical Firms," Discussion paper series 2015-06, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    11. Jing-Yuan Chio & Laura Magazzini & Fabio Pammolli & Massimo Riccaboni, 2012. "The Value of Failures in Pharmaceutical R&D," Working Papers 1/2012, IMT Institute for Advanced Studies Lucca, revised Jan 2012.
    12. Barrenho, E & Smith, PC & Miraldo, M, 2013. "The determinants of attrition in drug development: a duration analysis," Working Papers 12204, Imperial College, London, Imperial College Business School.
    13. Fabio Pammolli & Massimo Riccaboni & Nicola Carmine Salerno, 2012. "I Farmaci Oncologici in Italia: innovazione e sostenibilità economica," Working Papers CERM 02-2012, Competitività, Regole, Mercati (CERM).
    14. Jobjörnsson, Sebastian & Forster, Martin & Pertile, Paolo & Burman, Carl-Fredrik, 2016. "Late-stage pharmaceutical R&D and pricing policies under two-stage regulation," Journal of Health Economics, Elsevier, vol. 50(C), pages 298-311.
    15. Magazzini Laura & Fabio Pammolli, 2013. "R&D, Within and Between Patent Competition in the Pharmaceutical Industry," Working Papers 3/2013, IMT Institute for Advanced Studies Lucca, revised Jul 2013.
    16. Jing-Yuan Chiou & Laura Magazzini & Fabio Pammolli & Massimo Riccaboni, 2016. "Learning from successes and failures in pharmaceutical R&D," Journal of Evolutionary Economics, Springer, vol. 26(2), pages 271-290, May.

    More about this item

    Keywords

    R&D productivity; pharmaceutical industry;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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