Effects of profit-reducing policies on firm survival, financial performance, and new drug introductions in the research-based pharmaceutical industry

Darren Filson () and Neal A. Masia ()

Managerial and Decision Economics, 2007, vol. 28, issue 4-5, pages 329-351

Abstract: We introduce a computational model of the evolution of a value-maximizing research-based pharmaceutical firm and parameterize it using estimates of R&D costs, profit distributions, and candidate attrition rates. We use the model to estimate how the probability of surviving and covering the costs of R&D depends on R&D scale and the policy regime. In the model, even small reductions in profitability have substantial impacts on firm success and innovation, but the effects may not be visible to consumers for many years. Smaller and newer firms are most vulnerable to reductions in the rewards for innovation. Copyright © 2007 John Wiley & Sons, Ltd.

View list of references

Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1344 Link to full text; subscription required (text/html)

Related works:
Journal Article: Effects of profit-reducing policies on firm survival, financial performance, and new drug introductions in the research-based pharmaceutical industry (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this article

Managerial and Decision Economics is edited by Paul H. Rubin

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Series data maintained by Christopher F. Baum ().