Innovation and Growth in the UK Pharmaceuticals: The Case of Product and Marketing Introductions

46 Pages Posted: 15 Apr 2016 Last revised: 2 Dec 2019

See all articles by Farasat A. S. Bokhari

Farasat A. S. Bokhari

University of East Anglia (UEA) - School of Economic and Social Studies; University of East Anglia (UEA) - Centre for Competition Policy

Franco Mariuzzo

University of East Anglia (UEA) - Centre for Competition Policy

Anna Rita Bennato

Loughborough University - School of Business and Economics

Date Written: June 1, 2017

Abstract

New drug introductions are a key to growth for pharmaceutical firms. However not all innovations are the same and they may have differential effects that vary by firm size. We use quarterly sales data on UK pharmaceuticals in a dynamic panel model to estimate the impact of product (new drugs) and marketing (additional pack varieties) innovations within a therapeutic class on a firm's business unit growth. We find that product innovations lead to substantial growth in both the short and long run, whereas a new pack variety only produces short-term effects. The strategies are substitutes but the marginal effects are larger for product innovations relative to additional packs, and the effects are larger for smaller business units. Nonetheless, pack introductions offer a viable short-term growth strategy, especially for small and medium sized businesses.

Keywords: Growth; Innovation; Size; Pharmaceuticals; Business unit

JEL Classification: L25, L65, O31, O32

Suggested Citation

Bokhari, Farasat A. S. and Mariuzzo, Franco and Bennato, Anna Rita, Innovation and Growth in the UK Pharmaceuticals: The Case of Product and Marketing Introductions (June 1, 2017). Available at SSRN: https://ssrn.com/abstract=2758574 or http://dx.doi.org/10.2139/ssrn.2758574

Farasat A. S. Bokhari (Contact Author)

University of East Anglia (UEA) - School of Economic and Social Studies ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Franco Mariuzzo

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Anna Rita Bennato

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

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