Innovation and Corporate Growth in the Evolution of the Drug Industry

Posted: 19 Nov 2007 Last revised: 3 Sep 2013

See all articles by Giulio Bottazzi

Giulio Bottazzi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Fabio Pammolli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering; CERM Foundation

Giovanni Dosi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Marco Lippi

Dipartimento di Scienze Economiche (DiSSE); Einaudi Institute for Economics and Finance (EIEF)

Massimo Riccaboni

KU Leuven - Department of Managerial Economics, Strategy, and Innovation; IMT Institute for Advanced Studies

Abstract

This work studies the processes of growth of the worlds top 150 pharmaceutical firms, on the grounds of an original database which also allows disaggregate analysis at the level of single therapeutic classes and chemical entities. Our findings show that the industry - whose long - term evolution is driven by innovation, imitation and permanent creation of new markets - displays "fat tails" in the distribution of growth shocks, present at all levels of aggregation, with (relatively rare) big "spurs of growth", a significant autocorrelation of growth rates, a fall of variance of growth rates with size entirely dependent on corporate diversification patterns, in turn plausibly shaped by the "competence scope" of each firm, and different "life cycles" of diverse types of products, and persistent forms of heterogeneity across firms in terms of innovative output, which, however, do not not seem to affect comparative growth performances.

Keywords: Innovation, Corporate growth, Drug industry, Evolution

JEL Classification: L1, L6, O3

Suggested Citation

Bottazzi, Giulio and Pammolli, Fabio and Dosi, Giovanni and Lippi, Marco and Riccaboni, Massimo, Innovation and Corporate Growth in the Evolution of the Drug Industry. International Journal of Industrial Organization, Vol. 19, No. 7, 2001, Available at SSRN: https://ssrn.com/abstract=1031077

Giulio Bottazzi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy
+39-050-883343 (Phone)
+39-050-883344 (Fax)

Fabio Pammolli (Contact Author)

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering ( email )

Via Lambruschini 4C - building 26/A
Milano, 20156
Italy

CERM Foundation ( email )

Via Fiorentina, 1
Siena, Siena 53100
Italy

HOME PAGE: http://www.cermlab.it

Giovanni Dosi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy

HOME PAGE: www.lem.sssup.it

Marco Lippi

Dipartimento di Scienze Economiche (DiSSE) ( email )

14 Via Cesalpino
Rome, 00161
Italy
+39 06 4428 4202 (Phone)
+39 06 4404 572 (Fax)

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

Massimo Riccaboni

KU Leuven - Department of Managerial Economics, Strategy, and Innovation ( email )

Naamsestraat 69 bus 3500
Leuven, 3000
Belgium

IMT Institute for Advanced Studies ( email )

Complesso San Micheletto
Lucca, 55100
Italy

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