 Dynamic impact of uncertainty on R&D cooperation formation and research performance: Evidence from the bio-pharmaceutical industryTannista Banerjee and Ralph Siebert Research Policy, 2017, vol. 46, issue 7, 1255-1271 Abstract: Our study concentrates on the dynamic research and development (R&D) process in the pharmaceutical industry, which is characterized by high uncertainty and a low probability of success in passing research phases. We evaluate whether R&D cooperations are appropriate instruments to help firms counter various types of uncertainty in different R&D markets and across the drug development process. Our study uses a novel and comprehensive database on the pharmaceutical industry that tracks firms’ drug pipelines, R&D success rates, new drugs launched on the market and the formation of R&D cooperations throughout different research phases and research (therapeutic) markets from 1990 to 2011. We provide interesting and insightful results regarding technological, demand and profit uncertainty and their impacts on R&D cooperation formation across the drug development process. For example, we find that technological, demand and profit uncertainty vary drastically across R&D markets, and most types of uncertainty are significantly higher in the early research phase than in the late research phase. R&D cooperations are formed at the early stage of the R&D process to counter high technological, demand and profit uncertainty and to increase the likelihood of successfully passing drug development phases. In contrast, R&D cooperations formed at the late stage of the R&D process are less motivated by these types of uncertainty and more motivated by R&D funding scarcity. Our calculation shows that an early-stage R&D cooperation would increase life expectancy for the U.S. population by 2.6 million years and a late-stage R&D cooperation would decrease life expectancy by 56,000 years. Keywords: Demand uncertainty; Drug development; Dynamics; Profit uncertainty; Pharmaceutical industry; Research and development cooperation; Technological uncertainty; R&D markets (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:46:y:2017:i:7:p:1255-1271 DOI: 10.1016/j.respol.2017.05.009 Access Statistics for this article Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray More articles in Research Policy from Elsevier |
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