Price and Profit Control, New Competitive Dynamics,and the Economics of Innovation in the Pharmaceutical Industry

Henry G. Grabowski

No 95-39, Working Papers from Duke University, Department of Economics

Abstract: The focus of this paper is the economics of the pharmaceutical R&D process. Major developments currently impacting the industry include the fact that R&D costs for new drugs are rising very rapidly. Product life cycles are also shortening, meaning there is less time to recover R&D costs and other investment expenditures. Firms are increasingly dependent on a small number of "blockbuster" products to finance future research and development. This paper provides an overview of several factors influencing the environment for pharmaceutical R&D: trends in costs and product life cycles, returns from new drug introductions, and the consequences of price and profit controls on incentives.

JEL-codes: O4 (search for similar items in EconPapers)
Date: 1995
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Published in SYMPOSIUM ON INDUSTRIAL POLICY AND THE PHARMACEUTICAL INDUSTRY, Adrian Towse, ed.; London: Office of Health Economics, 1995, pages 77-91

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Persistent link: https://EconPapers.repec.org/RePEc:duk:dukeec:95-39

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