Size Metrics and Dynamics of Firms Expansion in the European Pharmaceutical Industry

Franco Mariuzzo and Xiaoheng Zhang
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Franco Mariuzzo: UCD Geary Institute, University College Dublin, Ireland
Xiaoheng Zhang: Economic and Social Research Institute, Dublin, Ireland

No 201037, Working Papers from Geary Institute, University College Dublin

Abstract: We generalize the growth-of-firm literature by linking alternative metrics of size via a Copula approach. We look at the result of the fitted Copula and justify the metric we base our analysis upon. We employ the Amadeus dataset and investigate the growth dynamics of the European pharmaceutical industry in the Single Market Programme era, 1990–2004. Relying on a set of dynamic panel Probit methods that deal with unobserved heterogeneity and initial conditions, we analyze how our units of investigation, multinationals, capture opportunities over time. We find strong evidence of state dependence and mean reversion, as predicated by the theory of maturation — firms face a period of rapid growth, followed by a slow down, or even a stop, in growth. We finish off our exercise by conditioning the fitted Copula on the predicted measure of size and simulate the remaining measures.

Keywords: Copula; Dynamic Nonlinear Panel Data Models; Entry; Firms Growth; Lower Bound; Pharmaceutical Industry; Single Market Programme; Unobserved Heterogeneity (search for similar items in EconPapers)
JEL-codes: C10 C11 C23 L11 L65 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2010-09-07
New Economics Papers: this item is included in nep-bec, nep-com and nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:ucd:wpaper:201037

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