The Vertical Chain of Research and Development in the Pharmaceutical Industry

Michael Ward () and David Dranove

Economic Inquiry, 1995, vol. 33, issue 1, 70-87

Abstract: This paper examines the relationship between basic and applied pharmaceutical research. The authors focus on three stages of R&D: government-funded basic research; publication in medical journals; and industry-funded applied R&D. They estimate that a one percent increase in basic research in a particular therapeutic category causes a 0.76 percent increase in industry R&D in that category, and a 1.71 percent increase in other categories, over seven years. The authors also find that research incentives differ across government, academic, and industry researchers. For example, government funding favors diseases that are less prevalent and more debilitating than industry funding. Copyright 1995 by Oxford University Press.

Date: 1995
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