Innovation During a Crisis: Evidence from COVID-19

33 Pages Posted: 29 Apr 2020 Last revised: 5 May 2020

See all articles by Kevin Bryan

Kevin Bryan

University of Toronto - Strategic Management

Jorge Lemus

University Of Illinois Urbana Champaign

Guillermo Marshall

University of British Columbia (UBC) - Sauder School of Business

Date Written: May 4, 2020

Abstract

The rate of medical research on COVID-19 is an order of magnitude faster than previous epidemics like Ebola, Zika, and H1N1. Nonetheless, this incredible rate of progress may mask inefficiency in the direction of innovation. Our empirical analysis shows that more severe epidemics, both across diseases and within COVID-19 over time, increase the share of new drug development coming from small firms, consisting of repurposed drugs, and aimed at non-vaccine therapies. We develop a theoretical model of innovation during a crisis explaining these patterns. The model suggests that there are too many quick-to-develop projects, especially from small firms. Policy remedies include advance purchase commitments based on ex-ante value, targeted research subsidies, or antitrust exemptions for joint research ventures.

Suggested Citation

Bryan, Kevin and Lemus, Jorge and Marshall, Guillermo, Innovation During a Crisis: Evidence from COVID-19 (May 4, 2020). Available at SSRN: https://ssrn.com/abstract=3587973 or http://dx.doi.org/10.2139/ssrn.3587973

Kevin Bryan

University of Toronto - Strategic Management ( email )

Canada

Jorge Lemus (Contact Author)

University Of Illinois Urbana Champaign ( email )

1407 Gregory Drive, DKH 214
Urbana, IL 61801
United States

HOME PAGE: http://sites.google.com/site/jorgelemuswebsite/

Guillermo Marshall

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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