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R&d Costs, Innovative Output and Firm Size in the Pharmaceutical Industry

dc.contributor.author DiMasi, Joseph A
dc.contributor.author Grabowski, Henry G
dc.contributor.author Vernon, John M
dc.date.accessioned 2013-04-23T16:46:07Z
dc.date.issued 1995-01-01
dc.identifier.issn 1357-1516
dc.identifier.uri http://hdl.handle.net/10161/6715
dc.description.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.
dc.relation.ispartof International Journal of the Economics of Business
dc.relation.isversionof 10.1080/758519309
dc.title R&d Costs, Innovative Output and Firm Size in the Pharmaceutical Industry
dc.type Journal article
pubs.begin-page 201
pubs.end-page 219
pubs.issue 2
pubs.organisational-group Duke
pubs.organisational-group Economics
pubs.organisational-group Trinity College of Arts & Sciences
pubs.publication-status Published
pubs.volume 2
dc.identifier.eissn 1466-1829


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