The Impact of Patenting on New Product Introductions in the Pharmaceutical Industry
Stuart J. H. Graham
Georgia Institute of Technology - Scheller College of Business
Matthew John Higgins
Georgia Institute of Technology - Scheller College of Business; National Bureau of Economic Research (NBER)
April 4, 2007
Since Comanor and Scherer (1969), researchers have been using patents as a proxy for new product development. In this paper, we reevaluate this relationship by using novel new data. We demonstrate that the relationship between patenting and new FDA-approved product introductions has diminished considerably since the 1950s, and in fact no longer holds. Moreover, we also find that the relationship between R&D expenditures and new product introductions is considerably smaller than previously reported. While measures of patenting remain important in predicting the arrival of product introductions, the most important predictor is the loss of exclusivity protection on a current product. Our evidence suggests that pharmaceutical firms are acting strategically with respect to new product introductions. Finally, we find no relationship between firm size and new product introductions.
Number of Pages in PDF File: 43
Keywords: Patenting, Pharmaceutical industry, New product management, Research productivity
JEL Classification: O30
Date posted: May 7, 2007
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