A planning model of pharmaceutical research and development

Despite the popular view that pharmaceutical research is a random process, and by inference unplannable, the long-term survival and development of a pharmaceutical company must be based on a steady flow of new products with a full understanding by management of the relationships between research expenditure and the likely revenues they will produce. In this paper is developed a model of the R&D function which uses probabilistic assumptions to compute the expected stream of revenues from a portfolio of projects involving the major development routes from which pharmaceutical products usually arise. The model is based on expected values of market and technical research performance and hence gives expected or indicated sales in the future as output.     

Managing a Portfolio of Interdependent New Product Candidates in the Pharmaceutical Industry

Highly regulated industries such as pharmaceuticals and agrochemicals face the challenge of maintaining a 0continuous stream of new products. This is difficult because of low probabilities of technical success, high development costs, uncertain market impact, a scarcity of good new product ideas, and limited human and capital resources available to develop them. The problem of evaluating and selecting which new products to develop and then of sequencing or of scheduling them is complicated further by the presence of dependencies between products both in the market place and in the development process itself. This study proposes a portfolio management approach that selects a sequence of projects, which maximizes the expected economic returns at an acceptable level of risk for a given level of resources in a new product development pipeline. A probabilistic network model of distinct activities is used to capture all the activities and resources required in the “process” of developing a new drug. A prioritization scheme suggesting sequences for developing new independent drug candidates with unlimited resources is generated with a conventional bubble chart approach. These sequences initiate a genetic algorithm (GA)‐based search for the optimal sequence in the presence of product dependencies and limited resources. By statistically evaluating the sequences generated during the GA search using a discrete event simulation model, it is possible to construct an economic reward‐risk frontier that illustrates the trade‐offs between expected rewards and risks. The model ideally is suited to answer various “what if” questions relative to changes in the resource level on pipeline performance. The methodology is illustrated with an industrially motivated case study, involving nine interdependent new product candidates targeting three diseases. The dramatic results yield a candidate sequence with an expected return 28 percent higher than the sequence suggested by the bubble chart approach at almost the same level of risk. The synergism among the candidate dependencies, pipeline resources, and economic and technical uncertainties demonstrates the necessity of a computationally intensive approach if the best development strategy is to be realized.     

A NEW PERSPECTIVE ON MULTIPLE INTERNAL RATES OF RETURN

The most commonly cited drawback to using the internal rate of return to evaluate deterministic cash flow streams is the possibility of multiple conflicting internal rates, or no internal rate at all. We claim, however, that contrary to current consensus, multiple or nonexistent internal rates are not contradictory, meaningless or invalid as rates of return. There is, moreover, no need to carefully examine a cash flow stream to rule out the possibility of multiple internal rates, or to throw out or ignore “unreasonable” rates. What we show is that when there are multiple (or even complex-valued) internal rates, each has a meaningful interpretation as a rate of return on its own underlying investment stream.It does not matter which rate is used to accept or reject the cash flow stream, as long as one identifies the underlying investment stream as a net investment or net borrowing. When we say it does not matter which rate is used, we mean that regardless of which rate is chosen, the cash-flow acceptance or rejection decision will be the same, and consistent with net present value.     

In Search of the Classics: A Study of the Impact of JPIM Papers from 1984 to 2003*

The Journal of Product Innovation Management (JPIM) was launched in 1984 and over its first two decades of existence evolved into the leading journal in the field of innovation and the management of technology. During these 20 years JPIM contributed to the field by publishing 488 academic papers. This paper is a follow‐up study to an earlier study that looked at how JPIM evolved in terms of knowledge stock and knowledge flows during the first two decades (published in JPIM, March 2007). That paper looked at what was published during the first 20 years, which sources were cited, and which journals cited JPIM papers. This study takes a closer look at the impact of JPIM on the field of innovation and the management of technology by identifying the most classic papers published in JPIM during its first two decades of existence. This study used multiple research methods to identify 64 candidate potential classics from the 488 papers published in the first 20 years of JPIM's existence, to analyze how they differ from the other 424 papers published in the journal, and to investigate authors' motivations for writing these papers. Finally, using survey responses from the Product Development and Management Association (PDMA) membership and other academics in innovation and new product development, the research then determines which 5 of the 64 candidate papers are considered to be the “most classic” papers published and the factors driving that determination. The findings show that classic papers are those presenting a “pioneering idea” in the field that creates buzz in both the academic and practitioner worlds. High numbers of citations are indeed the outcome of these endeavors, but being a classic requires more than having high numbers of citations. Authors of the true classics generally have worked hard to disseminate their research, usually to both academics and practitioners, perhaps also contributing to the network buzz created by their findings. While one of the five most classic papers represented the first investigation into a particular stream of research, the other four were culminations of a significant body of research, providing a distinct summary of known information on a topic at the time they were published and a clear road forward for future research on the topic. These bodies of knowledge have yet to be superseded by other culminating papers.     

Capacity signals and entry deterrence

If potential entrant firms are well informed they will generally not believe incumbent's threats to expand output when experiencing entry. But this expectation underlies most excess capacity models. We demonstrate an asymmetric information equilibrium in which potential entrants rationally fear output expansion by oligopolists with excess capacity. Less effective collusive oligopolies may be destabilized (expanding output) upon entry. One symptom of less effective collusion is excess capacity. Hence excess capacity becomes a signal of the potential for output expansion. In a rational expectations equilibrium this signal may also be mimicked by oligopolies which would not otherwise carry excess capacity.     

Top Management Involvement in New Product Development: A Review and Synthesis

Established literature on new product development (NPD) management recognizes top management involvement (TMI) as one of the most critical success factors. With increasing pressure to sustain competitive advantage and growth, NPD activities remain the focus of close interest from top management in many organizations. TMI in the NPD domain is receiving increasing academic attention. Despite its criticality, there is no systematic review of the existing literature to inform and stimulate researchers in the field for further investigation. This paper introduces the current state of literature on TMI in NPD, synthesizes important findings, and identifies the gaps and deficiencies in this research stream. The contents of the selected articles, which investigated TMI in NPD, are analyzed based on the type of the study, level of analysis, research methodology, operationalization of TMI, and main findings. Additionally, other studies, which did not directly investigate TMI and support in NPD, but were sufficiently related, are briefly summarized. As a result of this detailed literature review, it can be stated that both exploratory and relational studies provide rich evidence on the critical role of top management in NPD. However, the identified gaps and deficiencies in this research stream call for a better theoretical understanding and well‐defined constructs of TMI in the NPD domain for different levels of analysis for future studies.     

Why and How Combining Strong and Weak Ties within a Single Interorganizational R&D Collaboration Outperforms Other Collaboration Structures

The purpose of this paper is to demonstrate why and how an ambidextrous interorganizational R&D collaboration outperforms other collaboration structures in the creation of innovation. This research effort contributes to a growing stream of research in social network theory suggesting that the contradictory theories of the strength of weak ties and weak network structures on the one hand and the theory of strong ties and closed network structures on the other have a mutually reinforcing effect on innovation outcomes if combined rather than considered separately. An in‐depth exploratory single case study approach within an innovatively organized national R&D collaboration allowed giving further evidence for such a superior innovation performance and for this research to contribute to theory by demonstrating why and how such a combination may lead to higher innovation output and how this effect can be actively reinforced. It is suggested that the combination of strong and weak ties should occur at the individual rather than at the project or firm level. The authors distinguish between the additive effects of the respective innovation benefits of strong and weak ties, a positive interaction effect in the portfolio of dyadic ties of an individual and a second multilevel interaction effect of weak ties embedded in the ambidextrous network structure. Referring to previous empirical findings, intellectual property regulation and structural interdependency between network members showed a higher impact than trust with regard to leveraging weak ties and are important sources for achieving the multilevel interaction effect. Managerial implications of this research are that a large network will outperform several smaller, independent networks given that the right structure and processes are in place. Direct implications for the architecture of an ambidextrous R&D collaboration are discussed, and a framework for a new form of technology R&D collaboration called “semi‐open organization” is presented, which places itself between the extremes of traditional R&D in closed organizations and completely “open innovation” approaches.     

Price uncertainty and output concentration

This paper conducts an empirical investigation to assess the impact of price uncertainty on industry output concentration. Results show that greater price uncertainty leads to greater output concentration; the result is robust to controls for technological factors, barriers to entry effects and other industry controls. The empirical results are consistent with theory which shows that depending on firms attitudes towards risk, output concentration is likely to be endogenous to price uncertainty. Our empirical finding suggests that examining the magnitude of uncertainty could be a useful additional criteria in antitrust policymaking.     

The Output Effects of Government Sponsored Cartels During the New Deal

This paper uses the National Industrial Recovery Act of 1933, which set up industry-wide cartels in the manufacturing sector of the US economy, to gain empirical insight into the current debate on the output effects of cartels. Recent theoretical studies have demonstrated ways in which cartels could expand, rather than reduce output as is traditionally thought. The New Deal cartel experiment does not support this 'efficient cartel' view. On the contrary, the legislation brought about a reduction in manufacturing output, as traditional cartel theory would predict.     

Durable goods oligopoly

This paper models a durable-goods oligopoly as a differential game. Two cases are treated: sales, where firms cannot lease but must sell the good in question, and leasing, where firms do not sell but only rent. In the sales case, firms face increasing marginal cost of production and the good in question depreciates. For this case, a rational expectations feedback Nash equilibrium is constructed for which monopoly or oligopoly output is less than the efficient level. This gap between oligopoly and competitive output diminishes as the number of firms increases. When firms can only lease the good, the good is assumed not to depreciate and the monopoly level of steady state output is compared with the level of steady state output for a feedback equilibrium duopoly. For this case, the duopoly equilibrium has steady-state output that is less than the corresponding efficient level, but greater than the monopoly level. The leasing model is shown to be isomorphic to the adjustment-cost duopoly model of Driskill and McCafferty (Journal of Economic Theory, 49 (1989) 324–338).     

A Companion For NPV: The Generalized Relative Rate of Return

We show how to determine a unique rate, for a particular cash flow stream, that is used only whenever a project demands outside resources to compound the rates of the existing term structure precisely at those times. The net present value of the cash flow stream when discounted with the thus-modified term structure becomes zero. We therefore determine a vector of rates that belongs to the induced space of internal rates of return for that cash flow stream. The rate is applicable under discrete stochastic interest rate representations and provides maximum loan rates that may be contracted only when needed thus keeping a project financially autonomous. (Any investments required may be fully repaid by the project's own cash outflows).     

风电工程设计中的重要环节及应注意的问题

风电场建设中风电工程设计是重要的一环,是风电场建设成败的关键,而风电场的场址选择又是风电工程设计的重点,场址的选择直接影响未来风电场的发电量。结合实际设计经验,对风电工程设计中的重要环节进行了介绍,并提出应注意的问题。     

我国产业结构调整对外部财富的影响机制研究

为研究我国产业结构调整对外部财富的作用影响及其影响机制,本文从贸易传导渠道及金融传导渠道出发,建立理论模型,分析并阐述了双渠道传导下,产业结构调整影响外部财富的作用机理,同时运用时变参数状态空间模型进一步验证。研究结果表明,我国产业结构调整通过贸易传导渠道对外部财富起正向积累作用,并从金融传导渠道对外部财富进行负向削减,两者存在抵消效应。且我国第二产业产值比及第三、二产业产值比的扩大对外部财富存在区别影响。当下正处于全球产业链重构关键时期,本文期望从调整外部财富角度助力于我国产业结构的优化。     

Continuity,Change, and New Product Performance: The Role of Stream Concentration*

Product development teams often face the challenge of designing radically new products that cater at the same time to the revealed tastes and expectations of existing customers. In new product development projects, this tension guides critical choices about continuity or change concerning product attributes and team composition. Research suggests these choices interact, but it is not clear whether they are complements or substitutes and if the level of change in one should match or not the level of change in the other. In this article, we examine the interaction between product attribute change, team change, and a new team-level factor, which we term stream concentration, as it captures differences among team members in terms of familiarity with the knowledge domain of the new product being developed. We measure stream concentration as team members’ prior NPD experience within a given set of products and assess its impacts on the management of change in new product development projects using longitudinal data from the music industry. We analyze 2621 new product development projects between 1962 and 2008 involving 34,265 distinct team members. Results show that stream concentration is a critical factor in new product development projects that, together with product attributes and team composition, affects new product performance. We discuss implications for research and practice.     

A mathematical model for projecting the demand for scientists and technologists in national R & D institutes

This paper presents an analytical framework for man-power planning which is being developed as an aid to projecting the demand for scientists and technologists in India. It is presented in the hope that it might be of interest to people concerned with this issue In other developing countries. In using the model the main problem is that of measuring the output in the R & D institutes. In attempting this it is inevitable that some degree of subjective judgment is involved. The method adopted is described in the paper, and using a very simple input—output type of matrix and data taken from five-year plans, some preliminary results have been obtained which enable an assessment to be made of the demand for various kinds of scientists and technologists in the national R & D institutes in India.     

How to Count Patents and Value Intellectual Property: The Uses of Patent Renewal and Application Data

Patent counts are very imperfect measures of innovative output. This paper discusses how additional data—the number of years a patent is renewed and the number of countries in which protection for the same invention is sought—can be used to improve on counts in studies that require a measure of the extent of innovation. Simple weighting schemes are proposed, which may remove half of the noise in patent counts as a measure of innovative output. We describe models of the patent application and renewal processes whose parameter estimates can be used to assess the value of the proprietary rights created by the patent laws. We illustrate their use with estimates of how the value of patent protection would vary under alternative legal rules and renewal fees and with estimates of the international flows of returns from the patent system. Recent progress in the development of databases has increased the potential for this type of analysis.     

Economies of Scope and Density in the Market for Real Estate Brokerage Services

Using a multiproduct translog cost function, this paper examines the case for economies of scope and density in the market for residential real estate brokerage services. Earlier research that treated output as a homogeneous commodity reported modest economies of scale for this industry. The results of this study suggest that the composition of output is an important source of these scale economies, rather than simply the size of the firm. The economies of scope which we find imply that a balanced mix of listing and sales is the least costly type of operation, a result borne out by the product mix found in our sample. The results also show product-specific diseconomies of scale, suggesting that specialization in either listing or sales may be sub-optimal under the current institutional arrangements present in the market. Finally, market density appears to be, at best, only a nominal source of savings for real estate brokerage firms.     

Supply function equilibria with capacity constraints and pivotal suppliers

The concept of a supply function equilibrium (SFE) has been widely used to model generators' bidding behavior and market power issues in wholesale electricity markets. Observers of electricity markets have noted how generation capacity constraints may contribute to market power of generation firms. If a generation firm's rivals are capacity constrained then the firm may be pivotal; that is, the firm could substantially raise the market price by unilaterally withholding output. However the SFE literature has not fully considered the impact of capacity constraints and pivotal firms on equilibrium predictions. We characterize the set of symmetric supply function equilibria for uniform-price auctions when firms are capacity constrained and show that this set is increasing as capacity per firm rises. We provide conditions under which asymmetric equilibria exist and characterize these equilibria. In addition, we compare results for uniform-price auctions to those for discriminatory auctions, and we compare our SFE predictions to equilibrium predictions of models in which bidders are constrained to bid on discrete units of output.     

产出节制型低碳经济发展方式的经济学思考

本文以经济学基本假设为出发点,深入剖析低碳经济的经济学内涵。研究发现只有投入约束的经济模式在低碳经济时代是行不通的,必须通过产出约束对碳排放的影响进行控制与调节。文章在时间和空间多维度下提出建立产出节制型低碳经济发展方式,在此基础上,进一步演绎了关于个体理性与集体理性、公平与均衡的经济学理念。     

The impact of internationalization on performance and innovation: The moderating effects of ownership concentration

Researchers in international business have long been interested in understanding the impact of internationalization on performance and innovation. However, prior studies of this research stream offer mixed results. This study contributes to this research stream by employing agency theory to investigate how ownership concentration affects the performance and innovation implications of internationalization. Specifically, we examine two primary effects of ownership concentration: the incentive alignment effect, proxied by the controlling shareholder??s cash flow rights, and the entrenchment effect, proxied by the divergence between control rights and cash flow rights of the controlling shareholder. Based on a sample of Taiwan??s publicly listed firms, we find that the incentive alignment effect moderates the relation between internationalization and performance and innovation positively and the entrenchment effect moderates the relation negatively. These findings shed light on the mixed results of the literature. In addition, most countries outside the United States and the United Kingdom have high ownership concentration; therefore, our results may be generalizable to other settings, providing insight into the role of corporate governance in internationalization.