Persistence of innovation, technological change and quality-adjusted patents in the US pharmaceutical industry

Gautier Duflos

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: This paper analyzes American pharmaceutical firms' persistence in innovating just before the wave of mergers and acquisitions that accompanied the "Biotech revolution". We evaluate the impact of past innovative activity on firms' innovation propensities using a non-linear GMM estimator for exponential models that allows for predetermined regressors and linear feedback. We find that innovative activity at the firm level depends strongly on the scope of past innovations. Breakthroughs in particular depend largely on past quality innovation made by firms, and this effect may likely deter further pioneering discoveries rather than strengthen incentives to invest on non cumulative R&D. The results also shed light on the importance of small firms in the dynamics of innovation in pharmaceutical industry, and suggest that large firms persist in using patents strategically to remain dominant.

Keywords: Patent citations; pharmaceutical industry; persistence in innovation (search for similar items in EconPapers)
JEL-codes: C23 L12 O31 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2006-01
New Economics Papers: this item is included in nep-com, nep-ent, nep-hea, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:bla06029

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