The Determinants of Pharmaceutical R&D Expenditures: Evidence from Japan |
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Authors: | Jörg C Mahlich Thomas Roediger-Schluga |
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Institution: | (1) Economic Policy Department, Austrian Federal Economic Chamber, Wiedner Hauptstrasse 63, A-1045 Vienna, Austria;(2) Department of Technology Policy, ARC systems research, Donau-City-Strasse 1, A-1220 Vienna, Austria |
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Abstract: | During the past 20 years, the world pharmaceutical industry has experienced a dramatic increase in R&D intensity. We apply
and extend a model developed by Grabowski and Vernon (2000, Journal of Evolutionary Economics, 10, 201–215) with a pooled data sample of the 15 publicly listed Japanese drug firms for the period 1987–1998. As in the original
study, we find expected returns to be an important determinant of R&D spending in the Japanese drug industry, albeit considerably
smaller than in the U.S., which is particularly obvious in the case of returns from newly introduced drugs. However, our results
are sensitive to econometric model specification, in particular to controlling for serial correlation and to a dynamic specification
of the baseline model. Likewise, estimates on financial constraints are sensitive to model specification, indicating that
Japanese drug firms face small or no financial constraints. Our results are consistent with the general literature on R&D
investment behaviour, yet raise some methodological questions with regard to the original study. |
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Keywords: | investment Japan panel data estimation pharmaceuticals R& D |
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