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The Impact of Patenting on New Product Introductions in the Pharmaceutical Industry

43 Pages Posted: 7 May 2007  

Stuart J.H. Graham

Georgia Institute of Technology - Scheller College of Business

Matthew John Higgins

Georgia Institute of Technology & NBER; National Bureau of Economic Research (NBER)

Date Written: April 4, 2007

Abstract

Since Comanor and Scherer (1969), researchers have been using patents as a proxy for new product development. In this paper, we reevaluate this relationship by using novel new data. We demonstrate that the relationship between patenting and new FDA-approved product introductions has diminished considerably since the 1950s, and in fact no longer holds. Moreover, we also find that the relationship between R&D expenditures and new product introductions is considerably smaller than previously reported. While measures of patenting remain important in predicting the arrival of product introductions, the most important predictor is the loss of exclusivity protection on a current product. Our evidence suggests that pharmaceutical firms are acting strategically with respect to new product introductions. Finally, we find no relationship between firm size and new product introductions.

Keywords: Patenting, Pharmaceutical industry, New product management, Research productivity

JEL Classification: O30

Suggested Citation

Graham, Stuart J.H. and Higgins, Matthew John, The Impact of Patenting on New Product Introductions in the Pharmaceutical Industry (April 4, 2007). Available at SSRN: https://ssrn.com/abstract=984628 or http://dx.doi.org/10.2139/ssrn.984628

Stuart J.H. Graham

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St. NW
Atlanta, GA 30308
United States
404-385-0953 (Phone)
404-894-6030 (Fax)

HOME PAGE: http://https://www.scheller.gatech.edu/graham

Matthew John Higgins (Contact Author)

Georgia Institute of Technology & NBER ( email )

800 West Peachtree Street
Atlanta, GA 30308
United States
404-894-4368 (Phone)
404-894-6030 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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