Did the COVID-19 Pandemic Propel Usage of AI in Pharmaceutical Innovation? New Evidence from Patenting Data

38 Pages Posted: 14 Jan 2023

See all articles by Sawan Rathi

Sawan Rathi

Indian Institute of Management Ahmedabad

Adrija Majumdar

Indian Institute of Management, Ahmedabad - Information Systems Area

Chirantan Chatterjee

SPRU-Sussex, U-Sussex Business School; Hoover Institution, Stanford University

Date Written: December 24, 2022

Abstract

It is now much discussed that Artificial Intelligence (AI) as a General Purpose Technology (GPT) can resolve the efficiency problems of industries, including in pharmaceutical markets where productivity challenges continue in costs and time for new drug discovery. But did the COVID-19 pandemic inadvertently accelerate the pace of AI adoption in pharmaceutical innovation? We answer this question using novel data on pharmaceutical patents. We use two different databases to analyze abstracts of pharmaceutical patents applied in the USA. Topic modeling was used to identify patents with technical artifacts and classify them as treated group AI adopting patents. An AI dictionary is used to match AI-related keywords in the patent abstracts. Subsequently, using a difference-in-differences research design we observe that both presence and intensity of AI in pharmaceutical patents have increased with pandemic. An increase in AI is also related to reduced time taken from application to publication of a patent suggesting innovation efficiencies in the industry. Finally, we find that results are driven by firms that have already built AI capability in the past. Our results remain consistent with various robustness checks, and we conclude by discussing managerial and policy implications of our findings.

Note:
Funding Declaration: We thank comments from participants of Summer School on Data & Algorithms for STI studies at KU Leu- ven, Belgium. Chatterjee acknowledges support from the Hoover Institution Visiting Fellowship at Stanford University and University of Sussex Business School research grants. He also acknowledges insights gained from his consulting work on AI and Lifesciences with Marlabs Inc, a US-based consulting firm in the digital health space.

Conflict of Interests: None to declare.

Keywords: Innovation Management, AI, Pharmaceutical Industry, Patents, Pandemic

Suggested Citation

Rathi, Sawan and Majumdar, Adrija and Chatterjee, Chirantan, Did the COVID-19 Pandemic Propel Usage of AI in Pharmaceutical Innovation? New Evidence from Patenting Data (December 24, 2022). Available at SSRN: https://ssrn.com/abstract=4311540

Sawan Rathi

Indian Institute of Management Ahmedabad ( email )

Vastrapur
Ahmedabad, 380015
India

Adrija Majumdar

Indian Institute of Management, Ahmedabad - Information Systems Area

Chirantan Chatterjee (Contact Author)

SPRU-Sussex, U-Sussex Business School ( email )

Brighton, BN1 9SL
United Kingdom

HOME PAGE: http://https://profiles.sussex.ac.uk/p535606-chirantan-chatterjee

Hoover Institution, Stanford University ( email )

Stanford, CA 94305
United States

HOME PAGE: http://https://www.hoover.org/profiles/chirantan-chatterjee

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