R&D in the Pharmaceutical Industry: A World of Small Innovations

• 成果类型: Article
• 署名作者: Ganuza, Juan-Jose; Llobet, Gerard; Dominguez, Beatriz
• 署名单位: Pompeu Fabra University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1080.0959
• 发表日期: 2009
• 页码: 539-551
• 关键词: Health care; pharmaceuticals; INNOVATION; Marketing

摘要

It is commonly argued that in recent years pharmaceutical companies have targeted their research and development (R&D) at small improvements of existing compounds instead of riskier drastic innovations. In this paper, we show that the bias in the pharmaceutical industry toward small innovations might be driven by the low sensitivity of the demand. In particular, small innovations get a proportionally larger reward because pharmaceutical firms target them at the inelastic segments of the demand. As a consequence, firms find it relatively more pro. table to invest in small innovations. We also study the effect on R&D incentives of marketing strategies and regulatory instruments aimed at controlling pharmaceutical expenditure.