Public-Private Interaction and the Productivity of Pharmaceutical Research

46 Pages Posted: 13 Jul 2000 Last revised: 18 Dec 2013

See all articles by Iain M. Cockburn

Iain M. Cockburn

Boston University Questrom School of Business; National Bureau of Economic Research (NBER)

Rebecca M. Henderson

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Date Written: April 1997

Abstract

We examine the impact of publicly funded biomedical research on the in-house research of the for-profit pharmaceutical industry. Qualitative analysis of the history of the discovery and development of a sample of 21 significant drugs, and a program of interviews with senior managers and scientists reveals a complex and often bidirectional relationship between the public and private sectors of the industry, illustrating the difficulties inherent in estimating the rate of return to public support of basic research. This analysis also highlights the importance for private sector firms of maintaining close connections to the upstream' scientific community, which requires them to make significant investments in doing in-house basic research and adopting appropriate internal incentives and procedures. We measure the extent and nature of this connectedness' using data on coauthorship of scientific papers between pharmaceutical company scientists and publicly funded researchers. These measures are significantly correlated with firms' internal organization, as well as their research performance in drug discovery as measured by important patents per research dollar. The size of the estimated impact of connectedness' to private research productivity implies a substantial return to public investments in basic research.

Suggested Citation

Cockburn, Iain M. and Henderson, Rebecca M., Public-Private Interaction and the Productivity of Pharmaceutical Research (April 1997). NBER Working Paper No. w6018, Available at SSRN: https://ssrn.com/abstract=226428

Iain M. Cockburn (Contact Author)

Boston University Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617-353-3775 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Rebecca M. Henderson

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E52-543
Cambridge, MA 02142
United States
617-253-6618 (Phone)
617-253-2660 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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