The Value of Failures in Pharmaceutical R&D

Jing-Yuan Chio, Laura Magazzini, Fabio Pammolli () and Massimo Riccaboni ()
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Jing-Yuan Chio: IMT School for Advanced Studies Lucca

No 1/2012, Working Papers from IMT School for Advanced Studies Lucca

Abstract: We build a cumulative innovation model in which both success and failure provide valuable information for future research. To test this learning mechanism, we use a dataset covering outcomes of world-wide R&D projects in the pharmaceutical industry, and proxy knowledge flows with forward citations received by patents associated with each project. Empirical results confirm theoretical predictions that patents associated with successfully completed projects (i.e., leading to drug launch on the market) receive more citations than those associated to failed (terminated) projects, which in turn are cited more often than patents lacking clinical or preclinical information. We therefore offer evidence of the value of failures as research inputs in (pharmaceutical) innovation

Keywords: R&D competition; patent policy; pharmaceutical industry (search for similar items in EconPapers)
JEL-codes: D23 D83 O3 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-01, Revised 2012-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in EIC working paper series

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