Innovation and growth in the UK pharmaceuticals: the case of product and marketing introductions

Farasat Bokhari, Franco Mariuzzo and Anna Rita Bennato
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Franco Mariuzzo: Centre for Competition Policy and School of Economics, University of East Anglia
Anna Rita Bennato: Centre for Competition Policy, University of East Anglia and Loughborough University

No 2016-01v3, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: New drug introductions are a key to growth for pharmaceutical firms. However not all innovations are the same and they may have differential effects that vary by firm size. We use quarterly sales data on UK pharmaceuticals in a dynamic panel model to estimate the impact of product (new drugs) and marketing (additional pack varieties) innovations within a therapeutic class on a firm's business unit growth. We find that product innovations lead to substantial growth in both the short and long run, whereas a new pack variety only produces short-term effects. The strategies are substitutes but the marginal effects are larger for product innovations relative to additional packs, and the effects are larger for smaller business units. Nonetheless, pack introductions offer a viable short-term growth strategy, especially for small and medium sized businesses.

Keywords: Growth; Innovation; Size; Pharmaceuticals; Business unit (search for similar items in EconPapers)
JEL-codes: L25 L65 O31 O32 (search for similar items in EconPapers)
Date: 2019-10-01
New Economics Papers: this item is included in nep-bec, nep-com, nep-ent, nep-sbm and nep-tid
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Journal Article: Innovation and growth in the UK pharmaceuticals: the case of product and marketing introductions (2021)
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