R&d Costs, Innovative Output and Firm Size in the Pharmaceutical Industry
Abstract
This study examines the relationships between firm size, R&D costs and output in the
pharmaceutical industry. Project-level data from a survey of 12 US-owned pharmaceutical
firms on drug development costs, development phase lengths and failure rates are used
to determine estimates of the R&D cost of new drug development by firm size. Firms
in the sample are grouped into three size categories, according to their pharmaceutical
sales at the beginning of the study period. The D&D cost per new drug approved in
the US is shown to decrease with firm size, while sales per new drug approved are
shown to increase markedly with firm size. Sales distributions are highly skewed and
suggest that firms need to search for blockbuster drugs with above-average returns.
The results are consistent with substantial economies of scale in pharmaceutical R&D,
particularly at the discovery and preclinical development phases. © 1995, Taylor &
Francis Group, LLC. All rights reserved.
Type
Journal articlePermalink
https://hdl.handle.net/10161/6715Published Version (Please cite this version)
10.1080/758519309Publication Info
DiMasi, Joseph A; Vernon, John; & Grabowski, Henry (1995). R&d Costs, Innovative Output and Firm Size in the Pharmaceutical Industry. International Journal of the Economics of Business, 2(2). pp. 201-219. 10.1080/758519309. Retrieved from https://hdl.handle.net/10161/6715.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
Collections
More Info
Show full item record
Articles written by Duke faculty are made available through the campus open access policy. For more information see: Duke Open Access Policy
Rights for Collection: Scholarly Articles
Works are deposited here by their authors, and represent their research and opinions, not that of Duke University. Some materials and descriptions may include offensive content. More info